After termination of the Floyds 99 agreement, for how long is the franchisee restricted from engaging in a Competitive Business?
Floyds_99 Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
The Franchisee 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 22 — CONTRACTS (FDD pages 57–58)
What This Means (2025 FDD)
According to Floyds 99's 2025 Franchise Disclosure Document, franchisees are subject to a post-termination covenant not to compete. This covenant restricts the franchisee, including their officers, directors, shareholders, principal managers, members, managers, and partners, from engaging in a Competitive Business for a period of two years. The two-year period starts either on the effective date of termination or expiration of the Franchise Agreement, or the date the franchisee ceases to conduct business, whichever is later.
The definition of a "Competitive Business" includes any business operating or franchising 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 applies within a 25-mile radius of the former franchised Floyds 99 location, within 25 miles of any other franchised Floyds 99 shop, or within 25 miles of any Floyds 99 shop owned by the franchisor or its affiliates.
However, the restriction does not prevent a former franchisee from owning 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 that franchisees have general skills and other opportunities. These non-compete terms are designed to protect Floyds 99's market and proprietary information after a franchise agreement ends.