Is a Buona franchisee obligated to maintain the confidentiality of the System?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
olicy amendments. The evidence of insurance shall include a statement by the insurer that the policy or policies will not be canceled or materially altered without at least thirty (30) days' prior written notice to Franchisor.
XIII. CONFIDENTIAL INFORMATION
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 Manuals, 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. Confidential Information does not include information Franchisee can demonstrate came to Franchisee's attention through legal methods other than by disclosure by Franchisor, or which, at the time of disclosure thereof by Franchisor to Franchisee, had become a part of the public domain, through publication or communication by others; or which, after disclosure to Franchisee by Franchisor, becomes a part of the public domain, through publication or communication by others.
13.2 Maintenance of Confidential Information. During the Term, and after the expiration or termination of this Agreement, Franchisee must use its best efforts to protect the Confidential Information. Accordingly, Franchisee must not communicate, divulge, or use for the benefit of any other person, persons or entity, any part of the Confidential Information. Franchisee may divulge such Confidential Information only to such employees of Franchisee who must have access to it in order to carry out Franchisee's obligations under this Agreement, and as may be required by law, provided Franchisee shall give Franchisor prior written notice of any such required disclosure by law immediately upon receipt of notice by Franchisee in order for Franchisor to have the opportunity to seek a protective order or take such other actions as it deems appropriate under the circumstances. Franchisor reserves the right to require Franchisee, or any of its owners, officers, partners, principals, managers, and employees having access to the Confidential Information to execute a confidentiality agreement or similar instrument(s) containing restrictions as those provided in this Section and, as applicable, throughout this Agreement. Such requirement shall not create an employee or joint employee relationship between Franchisor and Franchisee's employees, nor does it constitute control by Franchisor over Franchisee's employment matters.
XIV. COVENANTS
- 14.1 Franchisee's Best Efforts. Franchisee covenants that, during the Term, except as otherwise approved in writing by Franchisor, Franchisee or, alternatively, one designated management employee or approved agent if that employee or agent assumes primary responsibility for the operation of the Franchised Business, shall devote full time energy and best efforts to the development and promotion of the Franchised Business and to the management and operation of the Franchised Business.
- 14.2 Non-Competition and Non-Solicitation During Term. Franchisee acknowledges that Franchisee will receive valuable, specialized training and the Confidential Information. Franchisee covenants that, during the Term, Franchisee and any of its shareholders, officers, directors, members, managers, partners and guarantors, shall not, either directly or indirectly, for itself or themselves or on behalf of, or in conjunction with, any other person or entity:
- (a) Divert or attempt to divert any business or customer of the Franchised Business to a Competitive Business (defined in Section 14.5) by direct or indirect inducements or otherwise, or to do or perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Marks and the System;
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, franchisees are obligated to maintain the confidentiality of the Buona system both during the term of the franchise agreement and after its expiration or termination. The FDD defines "Confidential Information" as any non-public information relating to Buona or its system. This includes, but is not limited to, manuals, operational standards, recipes, marketing materials, and customer data.
The franchisee must actively protect this confidential information and cannot communicate, divulge, or use it for the benefit of any other person or entity. Disclosure is permitted only to employees who need access to fulfill their obligations under the franchise agreement or when legally required. In the event of a legally required disclosure, the franchisee must provide Buona with prior written notice to allow Buona to seek a protective order or take other appropriate actions. Buona retains the right to require franchisees, their owners, officers, and employees to sign confidentiality agreements.
The Buona FDD emphasizes that the contents of the manuals and the franchisee's knowledge of Buona's processes are secret, unique, confidential, and contain trade secrets. Franchisees must maintain the absolute confidentiality of all trade secrets during and after the term of the agreement and cannot use this information in any other business without written authorization from Buona. Franchisees must also prevent unauthorized disclosure of the manuals' contents, as such disclosure would cause irreparable harm to Buona and its system. The manuals remain the sole property of Buona and must be returned or destroyed upon termination of the agreement.
This obligation is typical in franchising, as franchisors need to protect their proprietary systems and methods. Prospective Buona franchisees should understand that this confidentiality requirement is a significant aspect of the franchise agreement. They should carefully review the definition of "Confidential Information" and ensure they have systems in place to protect it. Failure to comply with these confidentiality obligations could result in legal action from Buona.