Under what circumstances is 360 Painting permitted to disclose information regarding a franchisee or the operation of their 360 Painting business?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee and each Bound Party agree that while this Agreement remains in effect such party will not, directly or indirectly, disclose or publish to any party, or copy or use for such party's own benefit, or for the benefit of any other party, any of Franchisor's proprietary or confidential information, except as required to carry out Franchisee's obligations under this Agreement or as Franchisor has otherwise expressly approved in writing. All proprietary and confidential information of Franchisor is the sole and exclusive property of Franchisor. Franchisee and each Bound Party agree that the restriction contained in the preceding sentence will remain in effect with respect to the confidential information for five years following termination or expiration of this Agreement for any reason; provided, however, if the confidential information rises to the level of a trade secret, then such restriction shall remain in effect until such time as the information does not constitute a trade secret. Franchisee also agrees that it and all of its employees and agents will take appropriate steps to protect Franchisor's confidential information from any unauthorized disclosure, copying or use. At any time upon Franchisor's request, and in any event upon termination or expiration of this Agreement, Franchisee will immediately return any copies of documents where there are materials containing confidential information and will take appropriate steps to permanently delete and render unusable any confidential information stored electronically.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 56)
What This Means (2025 FDD)
According to 360 Painting's 2025 Franchise Disclosure Document, 360 Painting is permitted to disclose a franchisee's confidential information if required to carry out the franchisee's obligations under the Franchise Agreement or if 360 Painting has provided express written approval for the disclosure. This means that while franchisees must generally keep proprietary information about the 360 Painting system confidential, there are specific instances where disclosure is allowed.
This exception is crucial for franchisees as it allows them to operate their business effectively. For example, a franchisee might need to share certain operational details with suppliers or contractors to fulfill service obligations. Without this clause, such necessary disclosures could be considered a breach of contract. The FDD also clarifies that this obligation to protect confidential information extends for five years after the termination or expiration of the Franchise Agreement. However, if the confidential information rises to the level of a trade secret, then such restriction shall remain in effect until such time as the information does not constitute a trade secret.
It is important to note that any other disclosure or use of 360 Painting's confidential information is strictly prohibited unless explicitly approved in writing by 360 Painting. This underscores the importance of franchisees understanding what constitutes confidential information and adhering to the guidelines set forth in the Franchise Agreement and Brand Standards Manual. Franchisees should also ensure that their employees and agents are aware of these confidentiality obligations to prevent any unauthorized disclosures.
Overall, this provision balances the need to protect 360 Painting's proprietary information with the practical realities of operating a franchise. Franchisees should carefully review the definition of confidential information in the FDD and seek clarification from 360 Painting if they have any questions about what they can and cannot disclose.