factual

Does the Aw franchise agreement define what constitutes 'Confidential Information' in relation to the non-compete clause?

Aw Franchise · 2025 FDD

Answer from 2025 FDD Document

illed and complied with all the terms of this Agreement. Your indemnification obligations described above will continue in full force and effect after, and notwithstanding, the expiration or termination of this Agreement.

9. CONFIDENTIAL INFORMATION; NON-COMPETITION

9.1 Types of Confidential Information. We possess certain unique confidential and proprietary information and trade secrets consisting of the following categories of information,

methods, techniques, products, and knowledge developed by us and our franchisees: (4) methods, techniques, formats, specifications, procedures, information, systems and knowledge of and experience in the development, operation, and franchising of Papa Ray's Pizza Restaurants; (2) source of supply, ordering and inventory control and methods of providing the products and services sold at Papa Ray's Pizza Restaurants; (3) recipes and methods for preparation of food products; (4) knowledge of sales and profit performance of any one or more Papa Ray's Pizza Restaurants; (5) knowledge of test programs, concepts or results relating to new services and products; sources of products; (6) advertising, marketing and promotional programs; (7) construction, lay-out, equipping and decoration of Papa Ray's Pizza Restaurants; (8) selection and training of Papa Ray's Pizza Restaurant managers and other personnel; (9) methods of training managers and other employees; and (10) contents of the Operations Manual or other written material provided to you in whatever media. All such information will be referred to in this Agreement as "Confidential Information." We will disclose much of the Confidential Information to you, and will do so in furnishing you prototype plans for build-out of a Papa Ray's Pizza Restaurant, in advising about site selection, in providing training programs, in the list of approved suppliers, in the Operations Manual and in providing guidance and assistance to you under this Agreement.

In addition, in the course of the operation of the Papa Ray's Pizza Restaurant, and for six (6) months after the termination or expiration of this Agreement, you or your employees may develop ideas, inventions, formulas, concepts, methods, techniques or improvements relating to the Papa Ray's Pizza Restaurant, which you agree to disclose to us and which we may then authorize you to use in the operation of the Papa Ray's Pizza Restaurant. You agree that any corresponding intellectual property rights (including without limitation any rights in utility or design patents, know-how, trade secrets, trademarks, services marks and copyrights) in such ideas, inventions, formulas, concepts, methods, techniques or improvements will be our property and the title and rights to which shall be legally assigned to us immediately in writing by you, your Owners, your managers and/or employees. All of such information developed by you or your employees will be included in the term "Confidential Information," as defined above.

9.2 Non-disclosure Agreement. You agree that your relationship with us does not vest in you any interest in the Confidential Information other than the right to use it in the development and operation of Papa Ray's Pizza Restaurants under this Agreement, and that the use or duplication of the Confidential Information in any other business would constitute an unfair method of competition, a breach of this Agreement and copyright infringement. You acknowledge and agree that the Confidential Information belongs to us, is proprietary information, and may contain trade secrets belonging to us and is disclosed to you or authorized for your use solely on the condition that you agree, and you therefore do agree herein, that you: (1) will not use the Confidential Information during and after the term of this Agreement in any other business or capacity; (2) will maintain the absolute confidentiality of the Confidential Information during and after the term of this Agreement; (3) will not make unauthorized copies of any portion of the Confidential Information disclosed in written form; and (4) will adopt and implement all reasonable procedures we may prescribe from time to time to prevent unauthorized use or disclosure of the Confidential Information, including restrictions on disclosure to your employees and the use of non-disclosure and/or non-competition agreements we may prescribe for employees,

managers, or owners who receive training from us and/or who have access to the Confidential Information. Upon our request, you must provide us with copies of signed non-disclosure and/or non-competition agreements signed by any employees, managers or owners. Our right to require that such agreements be signed by your employees, to prescribe the form of agreement you use, and to receive copies of signed agreements are solely to ensure that you adequately protect the Confidential Information. The restrictions on your disclosure and use of the Confidential Information will not apply to the following: (a) information, processes, or techniques which are generally known and used in the food and restaurant industry (as long as the availability is not because of a disclosure by you) and (b) disclosure of the Confidential Information in legal proceedings when you are legally required to disclose it and you have first given us the opportunity to obtain an appropriate legal protective order or other assurance satisfactory to us that the information required to be disclosed will be treated confidentially.

9.3 In-Term Non-competition Agreement. You agree that we would be unable to protect the Confidential Information against unauthorized use or disclosure and would be unable to encourage a free exchange of ideas and information among Papa Ray's Pizza franchisees if franchisees and owners of franchisee were permitted to hold interests in any competitive businesses, as described below. You also acknowledge that we have granted this Franchise Agreement to you in part in consideration of, and in reliance on, your agreement to deal exclusively with us. Therefore, during the term of this Agreement, neither you, nor any Owner, may, either directly or indirectly, for yourself or through, on behalf of, or in conjunction with, any person or legal entity, own, maintain, operate, engage in, consult with or have any interest in (as disclosed or beneficial owner) any business which offers products or services which are the same as, or similar to, those offered by a Papa Ray's Pizza Restaurant, or any entity which is granting franchises or licenses for any business which offers products or services which are the same as, or similar to, those offered by a Papa Ray's Pizza Restaurant. (The ownership of five percent (5%) or less of a publicly traded company will not be deemed to be prohibited by this paragraph). Further, during the term of this Agreement, you will not (1) divert customers or business from your Papa Ray's Pizza Restaurant to any other business or (2) hire any employees of ours, our affiliates or any other franchisees.

10. FEES AND ROYALTIES

10.1 Initial Franchise Fee. You must pay us an initial franchise fee (the "Initial Franchise Fee") of Thirty Thousand Dollars ($30,000.00). Upon signing this Agreement, you must pay us Fifteen Thousand Dollars ($15,000.00) of the Initial Franchise Fee in cash.

Source: Item 22 — CONTRACTS (FDD pages 39–40)

What This Means (2025 FDD)

According to Aw's 2025 Franchise Disclosure Document, the franchise agreement does define what constitutes "Confidential Information" in relation to the non-compete clause. The agreement specifies that Aw possesses unique confidential and proprietary information and trade secrets. These include methods, techniques, formats, specifications, procedures, information, systems, and knowledge related to the development, operation, and franchising of Papa Ray's Pizza Restaurants. It also covers sourcing, inventory control, recipes, sales and profit performance knowledge, test program results, product sources, advertising programs, restaurant construction and layout, personnel selection and training, and the contents of the Operations Manual. All such information is referred to as "Confidential Information" within the agreement. Aw will disclose much of this information to the franchisee through prototype plans, site selection advice, training programs, approved supplier lists, the Operations Manual, and ongoing guidance.

The franchise agreement states that the franchisee's relationship with Aw does not grant any interest in the Confidential Information beyond the right to use it for operating Papa Ray's Pizza Restaurants under the agreement. The use or duplication of Confidential Information in any other business is considered an unfair method of competition, a breach of the agreement, and copyright infringement. The franchisee acknowledges that the Confidential Information belongs to Aw and may contain trade secrets, disclosed solely on the condition that the franchisee agrees not to use it in any other business, maintain its confidentiality, avoid unauthorized copies, and implement procedures to prevent unauthorized use or disclosure.

Furthermore, the agreement addresses non-competition both during the term of the agreement and after termination or expiration. During the term, franchisees and owners cannot have interests in competitive businesses. Post-term, for six months after termination or expiration, any ideas, inventions, formulas, concepts, methods, techniques, or improvements related to Papa Ray's Pizza Restaurant developed by the franchisee or their employees must be disclosed to Aw, and the corresponding intellectual property rights will belong to Aw. This information is also included in the definition of "Confidential Information."

Aw also requires franchisees to ensure that their employees, managers, and owners who receive training or have access to Confidential Information sign non-disclosure and/or non-competition agreements. This is to ensure adequate protection of the Confidential Information. However, the restrictions on disclosure and use of Confidential Information do not apply to information generally known in the food and restaurant industry (unless disclosed by the franchisee) or when disclosure is legally required in legal proceedings, provided Aw has the opportunity to obtain a protective order.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.