HOUSTON – A former Fantastic Sams Franchisee who opened a new, independent salon was blocked from doing business by a federal court recently after a suit filed by the hair salon corporation claimed he breached the company’s franchise agreement.
In November, a federal judge ruled that Gerald Mosley, who operated a Fantastic Sams franchise
in Cypress from 2005 to 2016, could not operate his new salon, Shear Perfection
of Cypress, located just miles away from his former Fantastic Sams Franchise.
The court stated Mosley must refrain from any business “that gives the public
the impression” the owner is still affiliated with Fantastic Sams.
In 2005, Mosley entered
into a 10-year agreement with Fantastic Sams Franchise Corp. as a franchisee
to provide salon services and hair care products under the Fantastic Sams
trademark. When the agreement expired in 2016, Mosley opened his own salon and
several months later, Fantastic Sams filed suit against Mosley for breach of
contract. According to the suit, Mosley was in “violation of his post-termination
obligations” and mentioned specifically the non-compete provision of the
contract. The suit also stated Mosley was in violation of “Fantastic Sams’
trademarks and trade dress.”
Per court documents, when
Mosley opened Shear Perfection of Cypress, a Fantastic Sams franchise business consultant visited Mosley’s former franchise location and found signage on the
door stating “We’re Moving!” with the new address for Shear Perfection. The
signage also stated the salon would use the same phone number. However,
according to the Franchise agreement Mosley had with Fantastic Sams, he could
not use his former franchise phone number for his new salon. Also according to
the terms of Mosley’s franchise agreement with Fantastic Sams, he could not
sell products or services “similar to those of the Fantastic Sams System”
within a 5-mile area of his old franchise.
In the ruling, U.S. Judge
Gray H. Miller, Southern District of Texas, granted Fantastic Sams’ motion for
a preliminary injunction and ordered Mosley “and all those who act in concert
or participation with him” from engaging in any business “in the sale or rental
of products or services the same as or substantially similar to those of the
Fantastic Sams System, within a five-mile radius of his former Fantastic Sams
salon” which includes Mosley’s current new business.
According to court
documents, Mosley argued “that the non-compete provision should be rendered
unenforceable” and cited Texas law which “contains limitations as to time,
geographical area and scope of activity to be restrained that are reasonable
and do not impose a greater restraint than is necessary to protect the goodwill
or other business interest of the promisee.” However, the court said it “finds
a two-year period and a five-mile radius limitation in operating a competing
hair salon is a reasonable restraint to protect Fantastic Sams’ goodwill and
that the “defendant and all those who act in concert or participation with him
are hereby enjoined from conducting business in any manner that gives the public
the impression that the agreement is still in force or that defendant is in any
way associated with Fantastic Sams.”
Fantastic Sams is one of
the largest full-service hair care salons, with 1,100 locations throughout North
America, according to the company’s website.