What happens to a Bang Cookies franchisee's obligation to maintain the confidentiality of Confidential Information after the franchise agreement terminates?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
ranty in the form attached to this Agreement as Exhibit 1; and (b) Franchisee's directors, officers, employees and agents where disclosure of the Know-How was necessary for the operations of the Franchised Business and where such director, officer, employee and/or agent previously executed and timely delivered to Franchisor the Confidentiality Agreement in the form attached as Exhibit 2.
6.C. RESTRICTIVE COVENANTS: CONFIDENTIAL INFORMATION
Franchisee agrees that, at all times, both during the Term of this Agreement and, after its expiration or termination, Franchisee: (a) shall not use the Confidential Information in any business or capacity other than the Bang Cookies Shop operated by Franchisee; (b) shall maintain the confidentiality of the Confidential Information at all times; (c) shall not make unauthorized copies of documents containing any Confidential Information; (d) shall take such reasonable steps as Franchisor may ask of Franchisee from time to time to prevent unauthorized use or disclosure of the Confidential Information; and (e) shall stop using the Confidential Information immediately upon the expiration, termination or Transfer of this Agreement. Franchisee agrees that the foregoing covenants and obligations shall also apply to: (a) 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; and (b) Franchisee's directors, officers, employees and agents where disclosure of the Confidential Information was necessary for the operations of the Franchised Business and where such director, officer, employee and/or agent previously executed and timely delivered to Franchisor the Confidentiality Agreement in the form attached as Exhibit 2.
6.D. RESTRICTIVE COVENANTS: UNFAIR COMPETITION AND IN-TERM NON-COMPETITION OBLIGATIONS
Franchisee agrees that during the Term of this Agreement, Franchisee shall not engage in the following activities (the "Prohibited Activities"): (a) owning and/or having any legal or equitable interest whether, as an individual proprietor, owner, partner, member or shareholder of a Corporate Entity, or, in any similar capacity, in a Competitive Business other than, owning an interest of 3% or less in a publicly traded company that is a Competitive Business; (b) operating, managing, funding and/or performing services whether, as an employee, officer, director, manager, consultant, representative, agent, and/or creditor or, in any similar capacity, for or benefitting a Competitive Business;
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies's 2024 Franchise Disclosure Document, the franchisee's obligation to maintain the confidentiality of Confidential Information extends beyond the termination or expiration of the franchise agreement. Specifically, the franchisee must continue to maintain the confidentiality of the Confidential Information at all times, even after the agreement ends. They are also prohibited from using the Confidential Information in any business or capacity other than the Bang Cookies Shop they operated during the term of the agreement. Unauthorized copying of documents containing Confidential Information is also forbidden.
Furthermore, the franchisee is required to take reasonable steps to prevent unauthorized use or disclosure of the Confidential Information, as requested by Bang Cookies from time to time. Upon termination or expiration of the agreement, the franchisee must immediately cease using the Confidential Information. These obligations also apply to the franchisee's owners, spouses, directors, officers, employees, and agents, provided they have executed the necessary agreements, such as the Franchise Owner and Spouse Agreement and Guaranty or the Confidentiality Agreement.
Upon termination of the Bang Cookies franchise agreement, the franchisee must also permanently cease operating as a Bang Cookies franchise and discontinue using the System, which includes the Confidential Information, Licensed Marks, Business Management System Data, and operations manual. The franchisee must also return the operations manual, Confidential Information, and all other confidential materials to Bang Cookies. However, the franchisee is allowed to retain copies of the franchise agreement, correspondence with Bang Cookies (excluding any Confidential Information contained therein), and other documents required to be kept by applicable law.
These stipulations are typical in franchising to protect the franchisor's proprietary information and maintain the integrity of the brand. A prospective Bang Cookies franchisee should understand that these confidentiality obligations are perpetual and legally binding, ensuring that the franchisor's trade secrets and confidential information remain protected even after the franchise relationship ends.