Is the Azal Coffee franchisee liable for any unauthorized use of the Confidential Information?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
WHEREAS, the Franchisee Parties understand the necessity of not disclosing any such information to any other party or using such information to compete against the Company, any affiliate(s) or other franchisee(s) of the Company, or in any business (i) that is a Competing Business (as defined below) or (ii) in which Trade Secrets and other Confidential Information (as defined below) could be used to the disadvantage of Franchisee, or the Company, any affiliate(s) of the Company, or the Company's other franchisees.
If this Agreement expires or terminates for any reason (including termination on a transfer), your rights to use the Intellectual Property and the Franchise Systems and all other rights associated with being an authorized Azal Coffee franchisee will cease and you must do the following:
(a) You must immediately and permanently discontinue the use of the Intellectual Property, the Confidential Information, the Franchise Systems, and any trademarks, names, and logos confusingly similar to the Marks or Trade Dress, and any other materials that may, in any way, indicate that you are or were an Azal Coffee franchisee, or in any way associated with us.
(b) You must immediately discontinue all advertising placed or ordered. You must remove and deliver to us all sign faces, advertising and promotional material, letterhead, forms, and any other items containing the Intellectual Property or the Confidential Information. You are responsible for the cost of sign and other identification removal and the cost of shipping signs and other materials to us. If you remain in possession of the Franchise Location, you must alter the premises to distinguish the premises from the appearance of a Store.
(c) You must cease using the Brand Standards Manual, the Confidential Information, and all other proprietary business information provided by us and must return to us all copies of the Brand Standards Manual, the Confidential Information, and other bulletins or other materials received from us containing information about the Intellectual Property and Stores.
c) The Franchisee Parties and their shareholders, officers, directors, members, managers, partners, owners, and investors, Family Members, and affiliates, must not, during the term of the Franchise Agreement and for a period of three (3) years after termination, expiration, non-renewal, or any other end of the Franchise Agreement, for any reason whatsoever, directly or indirectly: (a) divert or attempt to divert any business or customer of the Franchise Business or any other Store to any Competing Business by direct or indirect inducements or otherwise; (b) sponsor, appoint, or encourage or influence or promote friends, relatives, or associates to operate a Competing Business; or (c) employ any person or furnish or permit access to the Information to any person who is engaged or has arranged to become engaged in any activity in competition with Azal Coffee Stores, including involvement, either as an owner (except no more than one percent (1%) of the publicly traded securities of an entity), partner, director, officer, member, manager, employee, consultant, lender, representative, or agent, or in any other capacity, of any business that is involved, in whole or in part, in a Competing Business or in any business
d) The Franchisee Parties acknowledge and agree that if any of the Franchisee Parties should violate the provisions of this Section 4 with respect to the operation of a Competing Business following expiration, termination, or any other end of the Franchise Agreement, then the period for which the prohibition stated therein shall be extended until three (3) years following the date such Franchisee Parties ceases all activities that are in violation of this Section 4.
Source: Item 22 — CONTRACTS (FDD page 51)
What This Means (2024 FDD)
According to Azal Coffee's 2024 Franchise Disclosure Document, franchisees have responsibilities regarding confidential information. The Franchise Agreement states that the franchisee acknowledges the necessity of not disclosing any confidential information to any other party or using such information to compete against Azal Coffee, its affiliates, or other franchisees. This extends to any business that is a Competing Business or in which Trade Secrets and other Confidential Information could be used to the disadvantage of the franchisee, Azal Coffee, its affiliates, or Azal Coffee's other franchisees.
Upon termination or expiration of the Franchise Agreement, the franchisee must immediately and permanently discontinue the use of the Intellectual Property, the Confidential Information, and the Franchise Systems. This includes ceasing the use of the Brand Standards Manual and returning all copies of confidential information and proprietary business information provided by Azal Coffee. The franchisee is also responsible for discontinuing all advertising and removing any materials containing the Intellectual Property or Confidential Information, bearing the costs of removal and shipping.
Furthermore, during the term of the Franchise Agreement and for three years after its termination, expiration, or non-renewal, the franchisee is prohibited from diverting business or customers to any Competing Business, sponsoring the operation of a Competing Business, or employing anyone engaged in competition with Azal Coffee Stores. Violation of these provisions can result in an extension of the prohibition period for an additional three years from the date the franchisee ceases the violating activities. These stipulations highlight the importance of safeguarding Azal Coffee's confidential information and the potential liabilities associated with unauthorized use.