After termination of the Floyds 99 agreement, what is the geographic radius around a franchised location where a developer is restricted from engaging in a Competitive Business?
Floyds_99 Franchise · 2025 FDDAnswer from 2025 FDD Document
11.2 Post-Termination Covenant Not to Compete. Upon termination or expiration of this Agreement for any reason, Developer 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 Developer ceases to conduct business, whichever is later, neither Developer 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 Developer 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 11.1 above, located or operating within a 25 mile radius of the Franchised Location described in Developer's Franchise Agreements, 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 Franchisor or any affiliate of 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. Developer and its officers, directors, shareholders, Principal Managers, members, managers and/or partners acknowledge that they possess skills and abilities of a general nature and have other opportunities for exploiting such skills.
Source: Item 23 — RECEIPT (FDD pages 58–229)
What This Means (2025 FDD)
According to the 2025 Floyds 99 Franchise Disclosure Document, after the termination or expiration of the agreement, a developer is restricted from engaging in a Competitive Business within a 25-mile radius. This restriction applies for two years, starting from the termination or expiration date, or the date the developer stops conducting business, whichever is later. This covenant applies to the developer, their officers, directors, shareholders, Principal Managers, members, managers, and/or partners.
The term "Competitive Business" includes any business that operates or franchises retail hair care businesses deriving more than 5% of gross sales from haircuts or hair care products, or wholesale businesses deriving more than 5% of gross sales from hair care products. The restriction applies not only to the developer's franchised location but also within 25 miles of any other franchised Floyds 99 shop or any Floyds 99 shop owned by the franchisor or its affiliates.
This post-termination covenant aims to protect Floyds 99's market and brand integrity by preventing former developers from directly competing using the knowledge and experience gained during their franchise term. However, the agreement does allow for the ownership of securities in a Competitive Business if those securities are listed on a stock exchange or traded over-the-counter and represent 5% or less of the outstanding securities. This acknowledges the developer's skills and opportunities to earn a living outside of direct competition with Floyds 99.