After the Buildingstars franchise agreement terminates, is the franchisee still obligated to maintain the confidentiality of trade secrets and proprietary rights?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
C. Consequences of Termination. Upon termination or expiration of this Agreement, for any reason whatsoever, all of FRANCHISEE'S rights hereunder shall terminate. FRANCHISEE shall immediately thereafter discontinue use of all Marks, signs, colors, structures, printed goods and forms of advertising indicative of BUILDINGSTARS' business and return any copyrighted materials which have been provided to FRANCHISEE by BUILDINGSTARS, and if BUILDINGSTARS requests, shall assign its telephone numbers to BUILDINGSTARS and execute any and all documents necessary to do so. Further, FRANCHISEE shall pay all amounts due to BUILDINGSTARS, BUILDINGSTARS' Affiliates, and suppliers. Further, FRANCHISEE agrees to return any and all materials which contain Confidential Information in whatever form, including but not limited to the Confidential Operation Manual, to BUILDINGSTARS immediately. FRANCHISEE'S obligations regarding Trade Secrets and Confidential Information and Restrictive Covenant shall remain in full force and effect in accordance with their terms, notwithstanding such termination.
FRANCHISEE will immediately cease providing services to all Customers and forfeit any rights it may have to the Customers and any customer accounts. Upon request of BUILDINGSTARS, FRANCHISEE will assign to BUILDINGSTARS any or all of FRANCHISEE'S Customer contracts and BUILDINGSTARS will have the right to either service the accounts or assign the servicing of the accounts to others. At no such time will FRANCHISEE terminate a written contract until proper notice has been given to BUILDINGSTARS prior to termination.
Source: Item 23 — RECEIPT (FDD pages 43–217)
What This Means (2025 FDD)
According to Buildingstars' 2025 Franchise Disclosure Document, franchisees are obligated to maintain the confidentiality of trade secrets and proprietary rights even after the termination or expiration of the franchise agreement. This obligation remains in full force and effect, as stated in the FDD. This means that even after a franchisee leaves the Buildingstars system, they cannot disclose or use confidential information to compete with Buildingstars or its other franchisees.
The definition of confidential information is broad, including products, services, standards, procedures, techniques, sales information, profit margins, marketing procedures, expansion plans, customers, rates, fees and terms, databases, and any other information Buildingstars designates as confidential. It also includes trade secrets, operating procedures, customer lists, contracts, sales and promotional information, employee lists, supplier and vendor information, information about real property management companies or commercial real estate owners affiliated with customers, pricing information, and financial information. The franchisee must maintain the absolute confidentiality of all trade secrets and proprietary rights both during and after the term of the agreement.
This continued obligation is further reinforced by the requirement to return all materials containing Confidential Information, including the Confidential Operations Manual, to Buildingstars immediately upon termination or expiration of the agreement. The FDD also states that the franchisee's obligations regarding trade secrets, indemnification, and the restrictive covenant survive the termination, expiration, assignment, or transfer of the agreement. This ensures that Buildingstars' proprietary information remains protected, and the franchisee cannot exploit this information for their own benefit or the benefit of a competitor after leaving the franchise system. This is a common practice in franchising to protect the brand and system standards.