Under what circumstances can a Best Western franchisee disclose Confidential Information to their officers, employees, or representatives without prior written consent from Best Western?
Best_Western Franchise · 2025 FDDAnswer from 2025 FDD Document
Notwithstanding the foregoing, the receiving party may disclose Confidential Information without the disclosing party's prior written consent to any of its officers, employees, or representatives (collectively, the "Representatives"), but only to those Representatives that (i) have a "need to know" in order to carry out the purposes of this Agreement or to provide professional advice in connection with this Agreement, (ii) are legally bound to the receiving party to protect information such as the Confidential Information under terms at least as restrictive as those provided herein, and (iii) have been informed by the receiving party of the confidential nature of the Confidential Information and the requirements regarding restrictions on disclosure and use as set forth in this Section. The receiving party shall be liable to the disclosing party for the acts or omissions of any Representatives to which it discloses Confidential Information which, if done by the receiving party, would be a breach of this Agreement.
8.3 Exceptions to the Obligation of Confidentiality. The receiving party will not be liable for the disclosure of any Confidential Information which is: (i) generally made available publicly or to third parties by the disclosing party without restriction on disclosure; (ii) rightfully received from a third party without any obligation of confidentiality; (iii) rightfully known to the receiving party without any limitation on disclosure prior to its receipt from the disclosing party; (iv) independently developed by employees of the receiving party without reference to the Confidential Information of the disclosing party, which can be demonstrated by written record; or (iv) required to be disclosed in accordance with applicable Laws, court, judicial, or other government order; provided, however, that the receiving party shall give the disclosing party reasonable notice prior to such disclosure (to the extent that it is legally permitted to do so) and shall comply with any applicable protective order.
Source: Item 23 — Receipts (FDD pages 108–413)
What This Means (2025 FDD)
According to Best Western's 2025 Franchise Disclosure Document, a franchisee, referred to as the receiving party, can disclose Confidential Information to their officers, employees, or representatives without Best Western's prior written consent under specific conditions. This is permissible only if these representatives: (1) have a "need to know" to fulfill the agreement's purposes or provide professional advice related to the agreement, (2) are legally bound to protect the information under terms as restrictive as those in the agreement, and (3) have been informed about the confidential nature of the information and the restrictions on its disclosure and use.
This provision means that Best Western franchisees must ensure their employees and representatives are under strict confidentiality obligations, similar to those the franchisee has with Best Western. The franchisee remains liable for any breaches of confidentiality committed by their representatives as if the franchisee themselves had committed the breach. This liability underscores the importance of carefully vetting and training personnel who may have access to Confidential Information.
Furthermore, the FDD outlines exceptions to confidentiality obligations. A Best Western franchisee will not be held liable for disclosing information that: (1) is already publicly available without restriction, (2) was rightfully received from a third party without confidentiality obligations, (3) was already known to the receiving party without disclosure limitations, (4) was independently developed by the receiving party's employees without using the disclosing party's Confidential Information, or (5) is required to be disclosed by law or court order, provided reasonable notice is given to the disclosing party and any applicable protective order is complied with. These exceptions provide clarity on situations where the duty of confidentiality does not apply, offering franchisees some flexibility while still protecting Best Western's proprietary information.
These stipulations are typical in franchise agreements to balance the need for information sharing within a franchisee's organization with the franchisor's need to protect sensitive business information. Franchisees should carefully review these conditions and exceptions to understand their obligations and potential liabilities regarding Confidential Information.