Does the Floyds 99 non-compete agreement prevent a franchisee from being a representative for a Competitive Business during the term?
Floyds_99 Franchise · 2025 FDDAnswer from 2025 FDD Document
Therefore, other than the FLOYD'S 99 Shop licensed herein or authorized by separate agreement with the Franchisor, neither the Franchisee nor any of the Franchisee's officers, directors, shareholders, Principal Managers, Barbershop managers, equity owners, members, managers or partners, nor any member of his or their immediate families, shall during the term of this Agreement:
a. have any direct or indirect controlling interest as a disclosed or beneficial owner in a "Competitive Business" as defined below;
b. perform services as a director, officer, manager, employee, consultant, representative, agent or otherwise for a Competitive Business; or
c. divert or attempt to divert any business related to, or any client or account of the FLOYD'S 99 Shop, the Franchisor's business or any other FLOYD'S 99 franchisee's business, by direct inducement or otherwise, or divert or attempt to divert the employment of any employee of the Franchisor or another franchisee licensed by the Franchisor to use the Marks and Licensed Methods, to any Competitive Business by any direct inducement or otherwise.
d.
Source: Item 22 — CONTRACTS (FDD pages 57–58)
What This Means (2025 FDD)
According to the 2025 Floyds 99 Franchise Disclosure Document, the non-compete agreement during the term of the franchise agreement prohibits a franchisee from acting as a representative for a Competitive Business. Specifically, neither the franchisee, nor their officers, directors, shareholders, Principal Managers, Barbershop managers, equity owners, members, managers or partners, nor any member of his or their immediate families, can perform services as a representative for a Competitive Business during the term of the Agreement, unless otherwise authorized by Floyds 99.
A "Competitive Business" is defined as any business operating or granting franchises or licenses to others to operate either a retail hair care business deriving more than 5% of its gross sales from haircuts or hair care products, or a wholesale business deriving more than 5% of its gross sales from the sale of hair care products. This restriction ensures that franchisees remain fully committed to the Floyds 99 system and do not divert resources or knowledge to competing ventures.
However, the franchisee is not prohibited from owning securities in a Competitive Business if such securities are listed on a stock exchange or traded on the over-the-counter market and represent 5% or less of that class of securities issued and outstanding. This exception allows for minor investments in publicly traded companies that might be considered competitive, without violating the non-compete agreement. Prospective franchisees should carefully consider these restrictions and ensure they do not have conflicting business interests that could violate the agreement.