What is the consequence if a Bang Cookies franchisee discloses know-how to an immediate family member?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee agrees that should Franchisee circumvent the restrictive covenants and obligations of this Article 6 by disclosing Confidential Information or Know-How to an Immediate Family Member, that Franchisor and the System, will be irreparably harmed. Franchisee agrees that if Franchisee or, one of Franchisee's Owners, discloses Confidential Information or Know-How to an immediate family member and, the immediate family member of Franchisee or an Owner, uses the Confidential Information or Know-How to engage in activities that, for Franchisee, qualify as Prohibited Activities, that Franchisor and the System will be irreparably harmed. Franchisee agrees that as between Franchisee and Franchisor, that Franchisee and Franchisee's Owners are in a better position to know if Franchisee permitted and/or provided an immediate family member with access to the Confidential Information or Know-How and that, therefore, Franchisee agrees that Franchisee will be presumed to have violated the terms of this Agreement and, in particular, the restrictive covenants and obligations set forth in this Article 6 if any member of Franchisee's immediate family or the immediate family of an Owner: (a) engages in any Prohibited Activities during any period of time during which Franchisee is prohibited from engaging in the Prohibited Activities; and/or (b) uses or discloses the Confidential Information and/or Know-How. Franchisee may rebut the foregoing presumption by providing evidence conclusively demonstrating that neither Franchisee nor Franchisee's Owners disclosed the Confidential Information and did not permit disclosure of the Confidential Information to the family member of Franchisee or Franchisee's Owner. Franchisee agrees that the foregoing covenants, obligations, representations, and burden of proof shall also apply to Franchisee's Owners and Spouses and, that Franchisee's Owners and Spouses shall each execute and deliver to Franchisor the Franchise Owner and Spouse Agreement and Guaranty in the form attached to this Agreement as Exhibit 1.
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies' 2024 Franchise Disclosure Document, if a franchisee discloses confidential information or know-how to an immediate family member, it is presumed that the franchisee has violated the terms of the franchise agreement, specifically the restrictive covenants. The FDD states that such a disclosure would cause irreparable harm to the franchisor and the Bang Cookies system. An "Immediate Family Member" is defined as the spouse and any other member of the household, including children and grandchildren.
The franchisee can rebut this presumption by providing evidence that neither they nor their owners permitted the disclosure of confidential information to the family member. The burden of proof is on the franchisee to demonstrate that they did not allow the disclosure. This obligation extends to the franchisee's owners and spouses, who are also required to sign a Franchise Owner and Spouse Agreement and Guaranty.
This clause is significant because it places a considerable responsibility on the franchisee to safeguard confidential information and know-how, even within their own family. It also highlights the importance of ensuring that all owners and spouses are fully aware of and compliant with the confidentiality obligations. Prospective Bang Cookies franchisees should carefully consider these restrictions and ensure they have measures in place to prevent unauthorized disclosures.