Under what conditions can a franchisee disclose trade secrets related to the Carls Jr. system?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
You agree to hold in confidence and agree not to disclose or in any way make available to any unauthorized person any trade secret or any information regarding any trade secret or any proprietary information made available to you by us. You may disclose trade secrets only to your employees and agents with a legitimate need to know, each of whom you will warrant will be subject to this confidentiality requirement.
Source: Item 14 — PATENTS, COPYRIGHTS, AND PROPRIETARY INFORMATION (FDD pages 58–59)
What This Means (2025 FDD)
According to the 2025 FDD, a Carls Jr. franchisee is generally prohibited from disclosing any trade secrets or confidential information related to the Carls Jr. system to unauthorized individuals, both during and after the term of the Franchise Agreement. This restriction is in place to protect the competitive advantage and proprietary information of the Carls Jr. system.
However, the FDD specifies a limited exception: a franchisee may disclose trade secrets to their employees and agents if those individuals have a legitimate need to know the information. In such cases, the franchisee must ensure that these employees and agents are also subject to confidentiality requirements, meaning they are legally obligated to keep the information secret. Carls Jr. may also require the franchisee to obtain a signed Confidential Disclosure Agreement from designated employees.
This policy reflects a common practice in franchising, where protecting trade secrets is crucial for maintaining brand consistency and competitive edge. The franchisee's responsibility is to implement a system that safeguards the confidentiality of Carls Jr.'s proprietary information, limiting access to only those within their organization who require it for their job functions and ensuring they are bound by confidentiality agreements.