Who is bound by the confidentiality covenants after the termination of a Card My Yard Franchise Agreement?
Card_My_Yard Franchise · 2025 FDDAnswer from 2025 FDD Document
You agree that you and your Owners will not acquire any interest in the Confidential Information, other than the right to use the Confidential Information disclosed to you in operating the Card My Yard business during the term of this Agreement, and thatthe use or duplication of any Confidential Information in any other business would constitute an unfair method of competition.
You agree to disclose the Confidential Information to your Owners and employees only to the extent reasonably necessary for the operation of the Card My Yard business pursuant to this Agreement.
Our Confidential Information is proprietary, includes trade secrets owned by us and our Affiliates, and is disclosed to you solely on the condition that you agree, and you do hereby agree, that you: (i) will not use the Confidential Information in any other business or capacity; (ii) will maintain the confidentiality of the Confidential Information during and after the term of this Agreement; (iii) will not make unauthorized copies of any portion of the Confidential Information; and (iv) will adopt and implement all reasonable procedures that we prescribe from time to time to prevent the unauthorized use or disclosure of the Confidential Information, including, without limitation, restrictions on disclosure of the Confidential Information to Card My Yard business personnel and others.
These covenants shall survive the expiration, termination or transfer of this Agreement or any interest herein and shall be perpetually binding upon you and each of the Owners.
Source: Item 23 — RECEIPTS (FDD pages 84–259)
What This Means (2025 FDD)
According to Card My Yard's 2025 Franchise Disclosure Document, both the franchisee and their owners are bound by confidentiality covenants even after the termination, expiration, or transfer of the Franchise Agreement. These covenants are perpetually binding, ensuring that the confidential information remains protected indefinitely. This obligation extends to not using the confidential information in any other business or capacity, maintaining its confidentiality, and preventing unauthorized copies or disclosures.
This means that even after a franchisee exits the Card My Yard system, they and their owners cannot use any of the brand's proprietary information, including trade secrets, operational methods, and marketing techniques, in any competing business. This restriction is designed to protect Card My Yard's competitive advantage and goodwill. The franchisee must also implement procedures to prevent unauthorized use or disclosure of confidential information by their personnel.
For a prospective Card My Yard franchisee, this continuing obligation highlights the importance of understanding and valuing the confidential information they will receive. It also underscores the need to carefully manage access to this information within their organization. Failure to comply with these confidentiality covenants can result in legal action and damages, as it constitutes a material breach of the Franchise Agreement. Franchisees should ensure they and their owners fully understand these obligations before entering into the agreement.
This type of clause is standard in franchising to protect the brand's intellectual property and trade secrets. The perpetual nature of the confidentiality covenant is more stringent than non-compete agreements, which typically have a limited duration. Prospective franchisees should seek legal counsel to fully understand the implications of these covenants and how they might affect their future business activities.