What constitutes a 'material' violation of Section 13.1 (confidentiality) for a Bombs Away franchise?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
- (v) Franchisee or any Owner commits a material violation of Section 7.2 (compliance with laws) or Section 13.1 (confidentiality), violates Section 13.2 (non-compete) or Article 15 (transfer), or commits any other violation of this Agreement which by its nature cannot be cured;
ARTICLE 13. COVENANTS
13.1 Confidential Information. 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, a material violation of Section 13.1 (confidentiality) is referenced within the context of actions that can lead to the termination of the franchise agreement. Specifically, if a franchisee or any owner commits a material violation of Section 13.1, Bombs Away has grounds to terminate the agreement. Section 13.1 outlines the franchisee's obligations regarding confidential information, including adhering to Bombs Away's procedures for maintaining confidentiality, disclosing information only to employees as necessary, and refraining from using the information in unauthorized ways.
For a Bombs Away franchisee, this means that any significant breach of confidentiality, such as unauthorized disclosure or use of Bombs Away's confidential information, could result in the termination of their franchise agreement. The franchisee must exercise a high degree of diligence to protect this information both during and after the term of the agreement. This obligation extends indefinitely beyond the agreement's termination or expiration.
It is important to note that the FDD does not provide specific examples of what Bombs Away would consider a 'material' violation of the confidentiality clause. A prospective franchisee should seek clarification from Bombs Away regarding what specific actions or omissions would be deemed a material breach of Section 13.1. Understanding this threshold is crucial, as it directly impacts the franchisee's ability to maintain their franchise and avoid potential termination.