What does Bang Cookies require a franchisee to do to prevent unauthorized use or disclosure of the Know-How?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
fidential Information. Franchisee agrees that competition by Franchisee, Owners, Spouses and/or Immediate Family Members could jeopardize the entire System and cause irreparable harm to Franchisor and franchisees of Bang Cookies Shops. Accordingly, Franchisee and Franchisee's Owners and Spouses agree to comply with the restrictive covenants set forth in this Article 6 and throughout this Agreement.
6.B. RESTRICTIVE COVENANTS: KNOW-HOW
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 Know-How in any business or capacity other than the operation of the Franchised Business pursuant to this Agreement and as instructed by Franchisor; (b) shall maintain the confidentiality of the Know-How at all times; (c) shall not make unauthorized copies of documents containing any Know-How; (d) shall take all reasonable steps that Franchisor requires from time
to time to prevent unauthorized use or disclosure of the Know-How; and (e) shall stop using the Know-How immediately upon the expiration, termination or Transfer of this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies' 2024 Franchise Disclosure Document, franchisees must take specific actions to protect the brand's Know-How, both during the term of the agreement and after its expiration or termination. These actions include not using the Know-How in any business other than the franchised Bang Cookies shop, maintaining the confidentiality of the Know-How at all times, and refraining from making unauthorized copies of documents containing the Know-How. Franchisees must also take reasonable steps that Bang Cookies requires to prevent unauthorized use or disclosure of the Know-How and cease using it immediately upon termination or transfer of the agreement. These obligations extend to the franchisee's owners and spouses, who must sign a Franchise Owner and Spouse Agreement and Guaranty. Additionally, directors, officers, employees, and agents who have access to the Know-How must sign a Confidentiality Agreement.
These requirements are typical in franchising, as franchisors need to protect their proprietary information and systems. The Know-How, which includes trade secrets and proprietary information related to the operation of a Bang Cookies shop, is a critical asset. By enforcing these measures, Bang Cookies aims to prevent franchisees or their associates from using the brand's confidential information to compete against the franchise system, either during the agreement term or afterward.
The franchisee's commitment to these restrictive covenants is reinforced by the agreement that access to the Bang Cookies system, training, licensed marks, operations manual, and Confidential Information is contingent upon entering into the franchise agreement. Bang Cookies emphasizes that competition from the franchisee, owners, spouses, or immediate family members could harm the entire system, justifying the need for these protective measures. This underscores the importance Bang Cookies places on safeguarding its intellectual property and maintaining a consistent brand experience across all franchise locations.
Prospective franchisees should carefully review the Franchise Owner and Spouse Agreement and Guaranty, as well as the Confidentiality Agreement, to understand the full scope of their obligations. They should also be prepared to implement and enforce these confidentiality measures within their organization, ensuring that all relevant parties are aware of and comply with the restrictions on using and disclosing the Know-How. Failing to adhere to these requirements could result in legal action and potential termination of the franchise agreement.