What are the consequences if an Aplus franchisee discloses or misuses confidential information?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
s of its franchisee, including compliance with minimum performance requirements under this Agreement; (iii) prepare a financial performance representation for Franchisor's Franchise Disclosure Document; and (iv) share vendor and supplier pricing data with its affiliates or certain third parties. Franchisor may but has no obligation to further provide Business Data to third parties to track sales or the impact of Programs on the Store, as well as to gain key insights related to the Store.
7. TRADE SECRETS AND OTHER CONFIDENTIAL INFORMATION
7.1. Confidentiality of Trade Secrets and Other Confidential Information
Franchisee acknowledges that Franchisor will disclose Trade Secrets and other Confidential Information to Franchisee during the training program, through the 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 or Franchisor's goodwill, 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 and each Owner (if applicable) 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, each Owner, and all officers, directors, executives, managers and members of the professional staff of Franchisee): (a) shall not, directly or indirectly, use the Trade Secrets or other Confidential Information in any other business or capacity or for the benefit of any other party; (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 disclose Trade Secrets or other Confidential Information to any third party or any individual associated with Franchisee who has not executed a form the same as or similar to the Nondisclosure Agreement attached hereto as Attachment 2; (d) 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 (e) 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 7.1 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.
7.3.
Source: Item 23 — RECEIPT (FDD pages 68–302)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, franchisees receive confidential information and trade secrets during training, through the manual, and via ongoing guidance. Franchisees cannot acquire any interest in this information beyond using it for their Aplus franchise. Using or duplicating this information in another business is considered unfair competition. Franchisees must maintain absolute confidentiality during and after the agreement, and they can't disclose it to third parties without a non-disclosure agreement. Unauthorized copies are prohibited, and franchisees must follow Aplus's procedures to prevent unauthorized use or disclosure. Franchisees are liable for any unauthorized disclosure or use by their employees, agents, or representatives.
Upon termination or expiration of the franchise agreement, the franchisee must cease using all confidential information and trade secrets. They must also stop using the Aplus system and marks, including slogans, logos, and advertising materials. The franchisee must take necessary actions to cancel or assign any assumed names containing "APLUS" to Aplus.
If a franchisee defaults, such as by failing to pay amounts owed or comply with the agreement, Aplus can terminate the agreement and pursue damages, costs, and expenses, including attorney's fees, unpaid royalty fees, and other amounts due. Aplus also has the option to remove the franchise's listing from advertising and technology platforms. These measures ensure the protection of Aplus's confidential information and brand integrity.
In practical terms, this means an Aplus franchisee must be extremely careful with any information they receive from Aplus that is not publicly available. They need to have strong internal controls to prevent leaks, and they need to ensure that all employees and contractors sign non-disclosure agreements. The consequences of misusing or disclosing confidential information can be severe, including termination of the franchise agreement and significant financial penalties.