What section of the Auntie Annes Franchise Agreement regarding confidential information and restrictive covenants are equity interest holders personally bound by?
Auntie_Annes Franchise · 2024 FDDAnswer from 2024 FDD Document
Each of the undersigned ("you") agrees that:
As an inducement to us to enter into the Franchise Agreement, and in consideration of the direct and personal benefits you will derive from the Franchise Agreement, you agree that: (i) you have read and understand all the provisions of Section 15 (Confidential Information; Restrictive Covenants) of the Franchise Agreement; (ii) you will be personally bound by all of the obligations and covenants of Franchisee in Section 15 of the Franchise Agreement as if the obligations and covenants were made and given personally by you directly to us; and (iii) the obligations and covenants are fair and reasonable and will not deprive you of your livelihood.
Source: Item 22 — CONTRACTS (FDD page 106)
What This Means (2024 FDD)
According to Auntie Anne's 2024 Franchise Disclosure Document, equity interest holders are personally bound by Section 15 of the Franchise Agreement, which pertains to confidential information and restrictive covenants. Schedule B, titled "Personal Covenants," specifies that individuals with an equity interest in the franchisee must sign an agreement acknowledging they have read and understood their obligations under the Franchise Agreement.
As an inducement for Auntie Anne's to enter into the Franchise Agreement, and considering the direct and personal benefits they will receive, equity interest holders agree to be personally bound by all obligations and covenants outlined in Section 15. This means that equity holders are held to the same standards as the franchisee regarding the protection of confidential information and adherence to restrictive covenants.
This provision ensures that all individuals who benefit financially from the Auntie Anne's franchise are committed to protecting the brand's confidential information and adhering to the agreed-upon restrictions. This is a common practice in franchising to safeguard the franchisor's proprietary information and maintain brand consistency.