What happens to the Buildingstars franchisee's obligations regarding trade secrets, confidential information, non-solicitation, and non-competition upon termination of the agreement?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
FRANCHISEE'S obligations regarding Trade Secrets and Confidential Information and Non-Solicitation and Non-Competition shall remain in full force and effect in accordance with their terms, notwithstanding such termination.
IX. TRADE SECRETS AND CONFIDENTIAL INFORMATION
FRANCHISEE shall not, during the term of this Agreement, or after the Transfer, termination or expiration, communicate or divulge to anyone, any information or knowledge concerning the products, services, standards, procedures, techniques, sales information, profit margins, marketing procedures, expansion plans, Customers, rates, fees and terms, databases, or such other information that gives BUILDINGSTARS' Affiliate, BUILDINGSTARS and FRANCHISEE a competitive advantage over those who do not know it, and other information or material which BUILDINGSTARS may designate as confidential, nor shall FRANCHISEE disclose or divulge in whole or in part any trade secrets or operating procedures of BUILDINGSTARS or its Affiliates, Customer lists, Customer contracts, sales and promotional information, employee lists, supplier and vendor information, information regarding real property management companies or commercial real estate owners affiliated with or related to any Customer, customer account, or any commercial real estate for which BUILDINGSTARS, its Affiliates, FRANCHISEE or any other franchisee has provided commercial cleaning services; pricing information; financial information furnished or disclosed to FRANCHISEE by BUILDINGSTARS or its Affiliates and any other information with respect to BUILDINGSTARS, unless such information is generally known and in the public domain, and except to the extent necessary to operate the Business ("Confidential Information"). FRANCHISEE will exercise the highest degree of diligence and make every effort to maintain the absolute confidentiality of all trade secrets and proprietary rights during and after the term of this Agreement and will endeavor to insure that its employees will also comply.
X. NON-COMPETITION AND NON-SOLICITATION
A. Non-Competition. During the term of this Agreement and for a period of two (2) years after the expiration, Transfer or termination of this Agreement for any reason, FRANCHISEE will not directly or indirectly, by itself or through corporations, partnerships, trusts, associations, joint ventures, limited liability companies, or other entities or otherwise perform any services for, engage in or acquire,
be an employee of, have any financial interest in, loan money to, or have any interest based on profits or revenues of, any cleaning service business or janitorial business within the Area or within any 10 mile area where BUILDINGSTARS or any Affiliate, franchisee or licensee of BUILDINGSTARS is operating.
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Survival.
FRANCHISEE'S obligations regarding trade secrets, non-competition and non-solicitation and indemnification, as well as accrued obligations of FRANCHISEE to BUILDINGSTARS, shall survive any Transfer of Interest or termination, expiration or assignment of this Agreement.
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2025 FDD)
According to Buildingstars's 2025 Franchise Disclosure Document, the franchisee's obligations regarding trade secrets, confidential information, non-solicitation, and non-competition remain in full effect even after the termination of the franchise agreement. This means that even after the agreement ends, the franchisee is still legally bound to protect Buildingstars's confidential information and adhere to the non-compete and non-solicitation clauses outlined in the agreement. These obligations are designed to protect Buildingstars's competitive advantage and customer relationships.
Specifically, the franchisee is prohibited from communicating or divulging any confidential information, trade secrets, or operating procedures of Buildingstars or its affiliates. This includes information related to products, services, standards, procedures, techniques, sales information, profit margins, marketing procedures, expansion plans, customer data, rates, fees, terms, databases, and any other information Buildingstars designates as confidential. The franchisee must maintain the confidentiality of this information both during and after the term of the agreement.
The non-competition clause restricts the franchisee from engaging in any cleaning service or janitorial business within the designated area or within a 10-mile radius of any Buildingstars location for a period of two years after the termination, transfer, or expiration of the agreement. This restriction applies whether the franchisee acts directly or indirectly through other entities. The non-solicitation clause, though not detailed in this excerpt, would typically prevent the franchisee from soliciting Buildingstars's employees or customers for a certain period after termination. These clauses are designed to prevent a former franchisee from using Buildingstars's proprietary information and business model to compete against them.
Buildingstars also emphasizes that these obligations, along with accrued financial obligations of the franchisee to Buildingstars, survive any transfer of interest, termination, expiration, or assignment of the agreement. This ensures that Buildingstars's rights and interests are protected regardless of changes in the franchisee's status or the agreement itself. Prospective franchisees should carefully review the specific terms of these clauses in the franchise agreement to understand the full extent of their obligations and the potential consequences of violating them.