During the term of the Floyds 99 agreement, can a franchisee's family member have a controlling interest in a Competitive Business?
Floyds_99 Franchise · 2025 FDDAnswer from 2025 FDD Document
e of the Marks hereunder, the Franchisor has also licensed commercially valuable information which comprises and is a part of the Licensed Methods, including without limitation, operations, proprietary products, proprietary product formulas, vendor lists, marketing, advertising and related information and materials and that the value of this information derives not only from the time, effort and money which went into its compilation, but from the usage of the same by all the franchisees of the Franchisor using the Marks and Licensed Methods. 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.
Source: Item 22 — CONTRACTS (FDD pages 57–58)
What This Means (2025 FDD)
According to the 2025 Floyds 99 Franchise Disclosure Document, during the term of the agreement, neither the franchisee nor any of their officers, directors, shareholders, principal managers, barbershop managers, equity owners, members, managers, partners, nor any member of their immediate families can have any direct or indirect controlling interest as a disclosed or beneficial owner in a Competitive Business, unless otherwise authorized by a separate agreement with 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 the sale of haircuts or hair care products, or a wholesale business deriving more than 5% of its gross sales from the sale of hair care products. However, owning securities in a Competitive Business is permitted if the securities are listed on a stock exchange or traded over-the-counter and represent 5% or less of that class of securities issued and outstanding.
This restriction prevents franchisees and their close family members from actively engaging in or controlling competing businesses during the term of the Floyds 99 franchise agreement. This is a fairly standard clause in franchise agreements to protect the brand's market position and prevent conflicts of interest. The exception for owning a small percentage of publicly traded securities provides some flexibility while still preventing active involvement in a competing business.