Can Alloy require a franchisee to obtain nondisclosure agreements from employees?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
B. 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, Alloy may require franchisees to obtain nondisclosure and confidentiality agreements from certain individuals. Specifically, Alloy can mandate these agreements from the franchisee, their owners, officers, directors, shareholders, partners, members, managers, and other key employees. These agreements must be in a form satisfactory to Alloy.
This requirement is tied to the confidential information that Alloy shares with its franchisees. This information includes knowledge of the Alloy facility's operation and the Alloy system, encompassing specifications, standards, and operating procedures. Alloy considers this information proprietary and confidential, including trade secrets not generally known to competitors. Franchisees and the specified individuals must maintain the absolute confidentiality of this information during and after the franchise agreement term.
For a prospective Alloy franchisee, this means they should be prepared to ensure that they, their management team, and key employees sign nondisclosure agreements as a condition of operating the franchise. This is a fairly standard practice in franchising, particularly when the franchisor shares sensitive business information. The franchisee should review the form of the nondisclosure agreement to understand its scope and obligations. It is important to note that the franchisee is responsible for ensuring compliance with these agreements.