Who owns the Business Management System Data as between the Bang Cookies franchisee and franchisor?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
Supplementing the foregoing, Franchisee agrees that the Business Management System will contain proprietary and confidential information owned by Franchisor and related to the System, and that:
- (1) Franchisee shall use the Business Management System and the Business Management System Data for the exclusive benefit of the Franchised Business and in accordance with the terms of this Agreement and Franchisor's standards and specifications as set forth in the operations manual;
- (2) All rights in and to the Business Management System are non-transferable and non-assignable to Franchisee and shall be utilized by Franchisee subject to the terms and conditions of this Agreement, Business Management System licenses that Franchisor may approve of and otherwise as determined by Franchisor in Franchisor's Reasonable Business Judgment;
- (3) As between Franchisee and Franchisor, Franchisor is and shall be the exclusive owner of the Business Management System Data, except that Franchisee shall store and maintain such data in accordance with all applicable local, state and federal privacy, data collection and solicitation laws. Among other things, upon expiration or termination of this Agreement for any reason, Franchisee shall preserve and maintain the Business Management System data for the purpose of transferring such data to Franchisor;
- (4) At all times, Franchisee shall provide and permit Franchisor to maintain direct and independent access to the Business Management System and Franchisee shall electronically transfer and transmit to Franchisor all Business Management System Data;
- (5) When instructed by Franchisor, Franchisee shall upgrade, replace and modify the Business Management System;
- (6) Franchisee shall promptly disclose to Franchisor all ideas and suggestions for modifications or enhancements to the Business Management System, to the configuration and templates associated with the Business Management System and that Franchisor shall have the right to use such ideas and suggestions and that Franchisee shall not receive or obtain any ownership rights or interests in any modifications or enhancements to the Business Management Software;
- (7) Other than permitting access to employees of the Franchised Business for the purpose of conducting the authorized operations of the Franchised Business, Franchisee shall not permit nor allow any third party to access, utilize or duplicate the Business Management System or the Business Management System Data without Franchisor's prior written consent;
- (8) Franchisee shall keep and maintain the Business Management System and the Business Management System Data as secret and confidential and Franchisee shall maintain security precautions to maintain the confidentiality and secrecy of the Business Management System Data and to prevent the unauthorized access or use;
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies' 2024 Franchise Disclosure Document, the franchisor retains exclusive ownership of the Business Management System Data. However, the franchisee is responsible for storing and maintaining this data in compliance with all applicable local, state, and federal privacy, data collection, and solicitation laws. Upon the expiration or termination of the Franchise Agreement, the franchisee must preserve and maintain the Business Management System data for the purpose of transferring it to Bang Cookies.
Bang Cookies requires franchisees to provide and permit the franchisor to maintain direct and independent access to the Business Management System. Franchisees must also electronically transfer and transmit all Business Management System Data to the franchisor. Additionally, franchisees are obligated to upgrade, replace, and modify the Business Management System when instructed by Bang Cookies. Franchisees must promptly disclose all ideas and suggestions for modifications or enhancements to the Business Management System, which Bang Cookies has the right to use without the franchisee obtaining any ownership rights.
Franchisees are only permitted to allow employees of the Franchised Business to access the Business Management System for the purpose of conducting authorized operations. They are prohibited from allowing any third party to access, utilize, or duplicate the Business Management System or the Business Management System Data without Bang Cookies' prior written consent. Franchisees must keep the Business Management System and the Business Management System Data secret and confidential, maintaining security precautions to prevent unauthorized access or use.
This arrangement is typical in franchising, where the franchisor needs to maintain control over data to ensure consistency and quality across all franchise locations. For a prospective Bang Cookies franchisee, this means they will be responsible for managing and protecting the data but will not own it and must transfer it back to the franchisor upon termination of the agreement.