What are the consequences if a Buona franchisee discloses confidential information?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
- (g) Contrary to the terms of Article VII hereof, Franchisee or any of its shareholders, members, managers, partners, officers, directors or principal employees discloses or divulges the contents of the Manual or other Confidential Information, or participates in the unauthorized use of the Confidential Information;
Franchisee covenants that Franchisee and any of its shareholders, officers, directors, members, managers, partners and guarantors, either directly or indirectly, for itself or themselves or on behalf of, or in conjunction with, any other person or entity, regardless of the cause for termination shall not:
(a) For a period of two (2) years following the expiration or termination of this Agreement, have any ownership interest in, maintain, operate, engage in, serve as a director, officer, manager, employee, consultant or representative of, grant a franchise to, advise, help, make loans to, lease property to, or have any interest in, directly or indirectly, a Competitive Business that is located within a radius of ten (10) miles of (i) the location specified in the Approved Site Location Addendum as described in Article I or (ii) the location of any other Buona Business, whether owned by Franchisor or any other Buona franchisee, in existence as of the date of expiration or termination of this Agreement.
14.4 Nondisclosure and Noncompetition Agreement*.* Franchisee must have its shareholders, officers, directors, members, managers, partners, guarantors, supervisory and principal employees, including managers and assistant managers (as a condition to their employment), anyone Franchisee may choose to send to training, and anyone who has access to the Manual or any of Franchisor's proprietary information or Confidential Information, execute Franchisor's standard Nondisclosure and Noncompetition Agreement (which is an exhibit to the Franchise Disclosure Document and as may be updated in the Manual) before performing any work at the Franchised Business or otherwise having access to Franchisor's proprietary information.
Franchisee, and its Principals acknowledge that the contents of the Manual and Franchisee's knowledge of Franchisor's processes, services, products, know-how and the System, are secret, unique, and confidential and contain trade secrets and other material proprietary to Franchisor.
- 13.1 Definition. For purposes of this Agreement, the term "Confidential Information" means information relating to Franchisor or the System that is not generally available to the public, including the Manual, operational standards, specifications, procedures and methods, recipes and food and preparation methods, prepared mixes, products, supplies, equipment, marketing, advertising and promotional material and methods, and accounting systems, and all other information and know-how relating to the methods of developing, operating and marketing the Franchised Business and the System. Further, Confidential Information shall include all customer information, lists, data and records of the Franchised Business.
Franchisee agrees not to disclose the contents of the Manual to unauthorized persons and to use Franchisee's best efforts to prevent unauthorized disclosure to any person, as this disclosure would cause irreparable harm to Franchisor and the System.
- (b) Franchisee shall immediately and permanently cease to use, by advertising or in any manner whatsoever, any menus, recipes, confidential formulae, equipment, methods, procedures, techniques associated with the System, the Marks, and Franchisor's other trade names, trademarks and service marks associated with the System.
Source: Item 23 — RECEIPTS (FDD pages 78–356)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, a franchisee's unauthorized disclosure of confidential information can lead to significant repercussions. Buona defines "Confidential Information" broadly to include the operations manual, operational standards, recipes, marketing materials, accounting systems, customer data, and any other know-how related to the business. Franchisees must protect this information during and after the franchise term. They can only share it with employees who need it to fulfill their obligations under the Franchise Agreement, and even then, Buona reserves the right to require those employees to sign confidentiality agreements.
If a Buona franchisee or their shareholders, members, managers, partners, officers, directors, guarantors, or principal employees disclose the contents of the manual or other confidential information, or participate in the unauthorized use of confidential information, it constitutes grounds for termination of the Franchise Agreement. Furthermore, franchisees must ensure that anyone with access to confidential information, such as shareholders, officers, directors, managers, partners, guarantors, supervisory and principal employees, and those sent to training, execute Buona's standard Nondisclosure and Noncompetition Agreement. Failure to obtain these signed agreements and deliver them to Buona within one week of execution also constitutes a breach of the agreement.
In addition to potential termination, the FDD specifies that unauthorized disclosure would cause irreparable harm to Buona and its system. After termination or expiration of the agreement, the franchisee must cease using all confidential information, including menus, recipes, and methods associated with the Buona system. Moreover, for a period of two years following the termination or expiration of the agreement, the franchisee is restricted from engaging in a competitive business within a 10-mile radius of the Buona location or any other Buona location. This includes having any ownership interest in, maintaining, operating, or being employed by a competitive business. These measures underscore the importance Buona places on protecting its confidential information and trade secrets.