What does the Casiola franchise agreement state regarding the franchisee's use of Know-How after transferring the franchise?
Casiola Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee agrees that competition by Franchisee, Owners and/or their immediate family members will jeopardize the System and cause irreparable harm to Franchisor and franchisees of Casiola Businesses. Accordingly, Franchisee and Franchisee's Owners agree to comply with the restrictive covenants set forth in this Agreement, including this Article 6.
6.B. RESTRICTIVE COVENANTS: KNOW-HOW
Franchisee agrees that, at all times, both during the Term of this Agreement and, after its expiration or termination, Franchisee: (a) shall not use the Know-How in any business or capacity other than the operation of the Franchised Business pursuant to this Agreement and as instructed by Franchisor; (b) shall maintain the confidentiality of the Know-How at all times; (c) shall not make unauthorized copies of documents containing any Know-How; (d) shall take all reasonable steps that Franchisor requires from time to time to prevent unauthorized use or disclosure of the Know-How; and (e) shall stop using the Know-How immediately upon the expiration, termination or Transfer of this Agreement. Franchisee agrees that the foregoing covenants shall also apply to: (a) Franchisee's Owners and that Franchisee's Owners shall each execute and deliver to Franchisor the Franchise Owner Agreement and Guaranty in the form attached
to this Agreement as Exhibit 1;
Source: Item 23 — RECEIPTS (FDD pages 47–209)
What This Means (2024 FDD)
According to the 2024 Casiola Franchise Disclosure Document, franchisees are restricted from using the brand's Know-How after transferring their franchise. The franchise agreement states that upon the transfer of the agreement, the franchisee must immediately cease using the Know-How.
This restriction extends beyond just the franchisee. The agreement specifies that these covenants apply equally to the franchisee's owners. This means that all parties involved, including owners, are legally obligated to stop using Casiola's proprietary information once the franchise is transferred.
'Know-How' is defined broadly in the FDD as all of Casiola's trade secrets and proprietary information related to the development, establishment, marketing, promotion, and operation of a Casiola business. This includes methods, techniques, specifications, procedures, policies, marketing strategies, and information contained in the Operations Manual and Confidential Information. This definition makes it clear that a wide range of information is protected and cannot be used by the franchisee or their owners after the franchise is transferred.