Who is restricted by the nondisclosure and noncompetition agreement with Floyds 99?
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.
The term "Competitive Business" as used in this Agreement shall mean any business operating or granting franchises or licenses to others to operate, either (i) a retail hair care business deriving more than 5% of its gross sales from the sale of haircuts or hair care products; or (ii) a wholesale business deriving more than 5% of its gross sales from the sale of hair care products.
Notwithstanding the foregoing, the Franchisee shall not be prohibited from owning securities in a Competitive Business if such securities are listed on a stock exchange or traded on the over-thecounter market and represent 5% or less of that class of securities issued and outstanding.
- 22.2 Post-Termination Covenant Not to Compete.
Upon termination or expiration of this Agreement for any reason, the Franchisee and its officers, directors, shareholders, Principal Managers, members, managers and/or partners agree that, for a period of two years commencing on the effective date of termination or expiration, or the date on which the Franchisee ceases to conduct business, whichever is later, neither Franchisee nor its officers, directors, shareholders, Principal Managers, members, managers and/or partners shall have any direct or indirect interest (through a member of any immediate family of the Franchisee or its owners or otherwise) as a disclosed or beneficial owner, investor, partner, director, officer, manager, employee, consultant, representative or agent or in any other capacity in any Competitive Business, defined in Section 22.1 above, located or operating within a 25 mile radius of the Franchised Location, within 25 miles of the Franchised Location of any other franchised FLOYD'S 99 Shop or, within 25 miles of the premises of any FLOYD'S 99 Shop owned by the Franchisor or affiliate of the Franchisor.
The restrictions of this Section shall not be applicable to the ownership of shares of a class of securities listed on a stock exchange or traded on the over-the-counter market that represent 5% or less of the number of shares of that class of securities issued and outstanding.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 43–44)
What This Means (2025 FDD)
According to the 2025 Floyds 99 Franchise Disclosure Document, both during the term of the agreement and after termination, several parties are subject to non-compete and nondisclosure restrictions. During the term of the agreement, the franchisee, along with their officers, directors, shareholders, Principal Managers, Barbershop managers, equity owners, members, managers, partners, and members of their immediate families are restricted.
These individuals are prohibited from having a direct or indirect controlling interest in a Competitive Business, performing services for a Competitive Business, or diverting business or employees from Floyds 99. A Competitive Business is defined as 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 hair care products. However, owning securities in a Competitive Business is allowed if the securities are listed on a stock exchange or traded over-the-counter and represent 5% or less of the outstanding securities.
Post-termination, for a period of two years, the franchisee and its officers, directors, shareholders, Principal Managers, members, managers, and/or partners are restricted from having any direct or indirect interest in any Competitive Business within a 25-mile radius of the Franchised Location, any other franchised Floyds 99 Shop, or any Floyds 99 Shop owned by the Franchisor or its affiliate. Similar to the during-term restrictions, ownership of a small percentage (5% or less) of publicly traded securities in a Competitive Business is permitted. These restrictions acknowledge that the franchisee and related parties possess general skills and abilities and have other opportunities for exploiting such skills.