Does the definition of 'Confidential Information' for a Chatime franchise include computer software programs implemented by the Franchisor?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
procedures and activities, surveys, techniques, data, research and development, Franchisor's methodology and procedures for operating a Chatime Store Business, knowhow and trade secrets, processes and formula, benchmarks for operation of a Franchised Business, customer information, lists and data, strategies, marketing plans, business plans and information; (f) any accounting procedures or financial information used in the Business System; (g) the contents of the Manual and each of the other Franchise Documents; (h) the Software and computer software programs if any (other than commercially available software packages) developed or implemented by the Franchisor for use in the Franchised Business, whether it is written, conveyed orally, stored or recorded by electronic, magnetic or other means and whether in original form or recompiled; and (i) all other information of a confidential nature.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, Confidential Information includes computer software programs under certain conditions. The FDD specifies that 'Confidential Information' encompasses various elements related to the Chatime business, including computer software programs. However, this inclusion is qualified; it applies specifically to software 'developed or implemented by the Franchisor for use in the Franchised Business.' This means that only proprietary software created or adapted by Chatime for its franchise operations falls under the umbrella of Confidential Information.
This definition has important implications for a prospective Chatime franchisee. It means that franchisees are obligated to protect the confidentiality of any custom software provided by Chatime. This protection extends to preventing unauthorized access, use, or disclosure of the software. However, the definition explicitly excludes 'commercially available software packages,' suggesting that franchisees are not bound to keep standard, off-the-shelf software confidential, even if it is used in the operation of the Chatime store.
The inclusion of software in the definition of Confidential Information is a fairly standard practice in franchising, particularly for brands that rely heavily on technology for their operations. This protection helps Chatime maintain a competitive advantage by preventing franchisees (or former franchisees) from sharing or exploiting proprietary software. Franchisees should carefully review the terms of the Franchise Agreement and Operations Manual to fully understand their obligations regarding the use and protection of Chatime's confidential information, including its software.