Does the All States M.E.D. franchisee acquire any ownership interest in the trade secrets disclosed by the franchisor?
All_States_M_E_D Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee acknowledges that Franchisor shall disclose Trade Secrets and other Confidential Information to Franchisee during the training program, through the Operations Manual, and as a result of guidance furnished to Franchisee during the term of this Agreement. Franchisee shall not acquire any interest in the Trade Secrets or other Confidential Information, other than the right to use it in the development and operation of the Franchised Business and in performing its duties during the term of this Agreement. Franchisee acknowledges that the use or duplication of the Trade Secrets or other Confidential Information in any other business venture would constitute an unfair method of competition. Franchisee acknowledges that the Trade Secrets and other Confidential Information are proprietary and are disclosed to Franchisee solely on the condition that Franchisee (and all holders of a legal or beneficial interest in Franchisee and all officers, directors, executives, managers and members of the professional staff of Franchisee): (a) shall not use the Trade Secrets or other Confidential Information in any other business or capacity; (b) shall maintain the absolute confidentiality of the Trade Secrets and other Confidential Information during and after the term of this Agreement; (c) shall not make any unauthorized copies of any portion of the Trade Secrets or other Confidential Information disclosed in written or other tangible form; and (d) shall adopt and implement all reasonable procedures prescribed from time to time by Franchisor to prevent unauthorized use or disclosure of the Trade Secrets and other Confidential Information. Franchisee shall enforce this Section as to its employees, agents and representatives and shall be liable to Franchisor for any unauthorized disclosure or use of Trade Secrets or other Confidential Information by any of them.
7.2 Additional Developments
All ideas, concepts, techniques or materials concerning the System or developed, in whole or in part, using Trade Secrets or other Confidential Information, whether or not protectable intellectual property and whether created by or for Franchisee or its owners or employees, shall be promptly disclosed to Franchisor and shall be deemed the sole and exclusive property of Franchisor and works made-for-hire for Franchisor, and no compensation shall be due to Franchisee or its owners or employees therefore, and Franchisee hereby agrees to assign to Franchisor all right, title and interest in any intellectual property so developed. Franchisor has the right to incorporate such items into the System. To the extent any item does not qualify as a "work made-for-hire" for Franchisor, Franchisee shall assign, and by this Agreement, does assign, ownership of that item, and all related rights to that item, to Franchisor and shall sign any assignment or other document as Franchisor requests to assist Franchisor in obtaining or preserving intellectual property rights in the item. Franchisor shall disclose to Franchisee concepts and developments of other franchisees that are made part of the System. As Franchisor may reasonably request, Franchisee shall take all actions to assist Franchisor's efforts to obtain or maintain intellectual property rights in any item or process related to the System, whether developed by Franchisee or not.
Source: Item 23 — RECEIPTS (FDD pages 44–174)
What This Means (2024 FDD)
According to the 2024 All States M.E.D. Franchise Disclosure Document, franchisees do not acquire any ownership interest in the trade secrets disclosed by the franchisor. All States M.E.D. will disclose trade secrets and other confidential information to the franchisee during the training program, through the Operations Manual, and as a result of guidance furnished during the term of the Franchise Agreement. The franchisee is only granted the right to use this information in the development and operation of their franchised business.
All States M.E.D. franchisees acknowledge that the use or duplication of the trade secrets or other confidential information in any other business venture would constitute an unfair method of competition. The franchisee must maintain the absolute confidentiality of the trade secrets and other confidential information during and after the term of the agreement. They are also prohibited from making any unauthorized copies of any portion of the trade secrets or other confidential information disclosed in written or other tangible form.
Furthermore, any ideas, concepts, techniques, or materials concerning the All States M.E.D. system or developed using trade secrets or confidential information are deemed the sole and exclusive property of All States M.E.D.. Franchisees must disclose any such developments to All States M.E.D. and agree to assign all rights and interests in any intellectual property developed to All States M.E.D.. This ensures that the franchisor retains control over its proprietary information and any improvements made to the system.