If the Alloy franchisee is a partnership, are the partners jointly and severally liable?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
You and your Owners, officers, directors, shareholders, partners, members and managers (if any) acknowledge that your entire knowledge of the operation of an ALLOY Facility and the System, including the knowledge or know-how regarding the specifications, standards and operating procedures of the services and activities, is derived from information we disclose to you and that certain information is proprietary, confidential and constitutes our trade secrets. The term "trade secrets" refers to the whole or any portion of know-how, knowledge, methods, specifications, processes, procedures and/or improvements regarding the business that is valuable and secret in the sense that it is not generally known to our competitors and any proprietary information contained in the Manuals or otherwise communicated to you in writing, verbally or through the Internet or other online or computer communications, and any other knowledge or knowhow concerning the methods of operation of the Facilities. You and your Owners, officers, directors, shareholders, partners, members and managers (if any), jointly and severally, agree that at all times during and after the term of this Agreement, you will maintain the absolute confidentiality of all such proprietary information and will not disclose, copy, reproduce, sell or use any such information in any other business or in any manner not specifically authorized or approved in advance in writing by us. We may require that you obtain nondisclosure and confidentiality agreements in a form satisfactory to us from the individuals identified in the first sentence of this paragraph and other key employees.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, if the franchisee is a partnership, the partners are jointly and severally liable for maintaining the absolute confidentiality of Alloy's proprietary information. This means each partner is individually responsible for the full obligation, as well as collectively responsible as a group. Alloy considers knowledge of its operations and system, including specifications, standards, and operating procedures, to be derived from the information it discloses to franchisees, and this information is proprietary, confidential, and constitutes trade secrets.
This obligation extends both during the term of the Franchise Agreement and after its termination. Partners must not disclose, copy, reproduce, sell, or use any of Alloy's proprietary information in any other business or in any manner not specifically authorized or approved in advance in writing by Alloy. Alloy may also require that franchisees obtain nondisclosure and confidentiality agreements from their partners and other key employees, in a form satisfactory to Alloy.
The practical implication for a prospective Alloy franchisee who chooses to operate as a partnership is that each partner bears significant individual risk regarding the confidentiality of Alloy's trade secrets. If one partner breaches the confidentiality agreement, all partners can be held liable. This is a stricter standard than simple joint liability, where the group is responsible but individual assets are not necessarily at risk.
This type of clause is relatively common in franchise agreements to protect the franchisor's intellectual property and trade secrets. Prospective franchisees should carefully consider the implications of joint and several liability, especially when entering into a franchise agreement as a partnership. It is advisable to consult with legal counsel to fully understand the risks and obligations involved.