Is a Casiola franchisee required to execute documents to protect the Franchisor's interests in litigation?
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; and (b) Franchisee's directors, officers, employees and agents where disclosure of the Know-How was necessary for the operations of the Franchised Business and where such director, officer, employee and/or agent previously executed and timely delivered to Franchisor the Confidentiality Agreement in the form attached as Exhibit 2.
6.C. RESTRICTIVE COVENANTS: CONFIDENTIAL INFORMATION
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 Confidential Information in any business or capacity other than the Casiola Business operated by Franchisee; (b) shall maintain the confidentiality of the Confidential Information at all times; (c) shall not make unauthorized copies of documents containing any Confidential Information; (d) shall take such reasonable steps as Franchisor may ask of Franchisee from time to time to prevent unauthorized use or disclosure of the Confidential Information; and (e) shall stop using the Confidential Information immediately upon the expiration, termination or Transfer of this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 47–209)
What This Means (2024 FDD)
According to the 2024 Casiola Franchise Disclosure Document, franchisees and their owners are required to comply with certain restrictive covenants and may be required to execute specific agreements to protect Casiola's interests. Specifically, franchisees must protect Casiola's confidential information and know-how, and owners must sign a Franchise Owner Agreement and Guaranty.
During the term of the agreement and after its expiration or termination, franchisees must maintain the confidentiality of Casiola's Know-How and Confidential Information, prevent unauthorized copies or disclosure, and cease using it upon termination or transfer of the agreement. These obligations also extend to the franchisee's owners, who must execute and deliver a Franchise Owner Agreement and Guaranty to Casiola.
In the event of a transfer of the franchise, the franchisee and each owner must execute a General Release, releasing Casiola from any claims arising on or before the transfer date. Additionally, if the transfer involves substantially all of the assets of the franchised business or a controlling interest in the franchisee, the transferee may be required to execute Casiola's then-current standard form Franchise Agreement and any other agreements Casiola requires. These agreements would supersede the original agreement, although they must maintain the same Royalty Fee, Advertising Contributions, and other financial obligations.
Prospective franchisees should carefully review Exhibits 1, 2, and 5 of the Franchise Agreement, which contain the forms for the Franchise Owner Agreement and Guaranty, the Confidentiality Agreement, and the General Release, respectively, to fully understand their obligations. They should also be aware of the conditions under which they may be required to sign a new franchise agreement upon transfer of the business.