Does the confidentiality obligation for Bombs Away survive the termination or expiration of the Franchise Agreement, and if so, for how long?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
With respect to all Confidential Information, Franchisee shall (a) adhere to all procedures prescribed by Bombs Away Franchising for maintaining confidentiality, (b) disclose such information to its employees only to the extent necessary for the operation of the Business; (c) not use any such information in any other business or in any manner not specifically authorized in writing by Bombs Away Franchising, (d) exercise the highest degree of diligence and effort to maintain the confidentiality of all such information during and after the term of this Agreement, (e) not copy or otherwise reproduce any Confidential Information, and (f) promptly report any unauthorized disclosure or use of Confidential Information. Franchisee acknowledges that all Confidential Information is owned by Bombs Away Franchising (except for Confidential Information which Bombs Away Franchising licenses from another person or entity). This Section will survive the termination or expiration of this Agreement indefinitely.
Source: Item 22 — CONTRACTS (FDD pages 35–36)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, the confidentiality obligations outlined in the franchise agreement survive its termination or expiration indefinitely. This means that even after the franchise agreement ends, either through its natural expiration after the initial term of 10 years or through early termination, the franchisee remains bound to protect Bombs Away's confidential information. This obligation extends to all confidential information owned by Bombs Away, including customer data generated or obtained by the franchisee.
This indefinite survival of confidentiality obligations is a significant consideration for prospective franchisees. It means that even after leaving the Bombs Away system, franchisees cannot use or disclose any confidential information learned during their time as a franchisee. This includes operational manuals, marketing strategies, customer lists, and other proprietary information. The franchisee must exercise a high degree of diligence and effort to maintain the confidentiality of all such information during and after the term of the Franchise Agreement.
The FDD specifies that upon termination or expiration of the agreement, the franchisee must return all copies of the Manual, Confidential Information, and any other materials provided by Bombs Away. They must also delete all Confidential Information and proprietary materials from electronic devices. This highlights the importance Bombs Away places on protecting its confidential information and the steps franchisees must take to ensure its continued protection even after the franchise relationship ends.
Franchisees should carefully consider the scope of the confidential information covered by the agreement and the implications of this indefinite obligation. It is advisable to seek legal counsel to fully understand the restrictions and ensure compliance both during and after the franchise term. This is a fairly standard clause in franchise agreements, as franchisors need to protect their proprietary information and business methods.