Does the post-termination non-compete apply to Floyds 99 shops owned by other franchisees?
Floyds_99 Franchise · 2025 FDDAnswer from 2025 FDD Document
on that is reasonably expected to prevent or actually does prevent the Franchisee or the owner of a controlling interest in the Franchisee entity from supervising the management and operation of the FLOYD'S 99 Shop for a period of 120 days from the onset of such disability, impairment or condition.
19. TERM AND EXPIRATION
- 19.1 Term. The term of this Agreement is for a period of 10 years from the date of this Agreement, unless sooner terminated as provided herein.
- 19.2 Continuation. If for any reason, the Franchisee continues to operate the Barbershop beyond the term of this Agreement or any subsequent renewal period, it shall be deemed to be on a month-to-month basis under the terms of this Agreement and subject to termination upon 30 days' notice or as required by law. If said hold-over period exceeds 90 days, this Agreement is subject to immediate termination unless applicable law requires a longer period. Upon termination after any hold-over period, the Franchisee and those in active concert with the Franchisee, including family members, officers, directors, partners and managing agents, are subject to the terms of Sections 20.3, 20.4, 22.2 and 22.3 of this Agreement and all other applicable post-termination obligations contained in this Agreement.
- 19.3 Rights Upon Expiration. At the end of the initial term hereof, the Franchisee shall have the option to renew its franchise rights for an additional term, by acquiring successor franchise rights, if the Franchisor does not exercise its right not to offer a successor franchise in accordance with Section 19.5 below and if the Franchisee:
- a. At least 30 days prior to expiration of the term, executes the form of Franchise Agreement then in use by the Franchisor;
- b.
Source: Item 22 — CONTRACTS (FDD pages 57–58)
What This Means (2025 FDD)
Based on the 2025 Floyds 99 Franchise Disclosure Document, the restrictive covenants outlined in Article 22 apply post-termination. Specifically, Section 19.2 states that upon termination after any hold-over period, the franchisee is subject to the terms of Sections 20.3, 20.4, 22.2 and 22.3 of the agreement, along with all other applicable post-termination obligations. However, the document does not explicitly state whether these post-termination non-compete obligations extend to Floyds 99 shops owned by other franchisees.
While the non-compete clause during the term of the agreement prevents franchisees from diverting business from other Floyds 99 franchisees, the FDD lacks specific details on whether this extends post-termination. Section 22.1(c) prohibits franchisees from diverting business from any other Floyds 99 franchisee's business during the term of the agreement.
To fully understand the scope of the post-termination non-compete and its applicability to other franchisees' shops, a prospective franchisee should seek clarification from the franchisor. Specifically, they should inquire whether the post-termination restrictions prevent them from engaging with or operating a competitive business in a way that could impact other Floyds 99 franchisees.