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 business interests.”
Miller concluded 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.