Does the definition of 'Confidential Information' for a Chatime franchise include software programs developed 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, the definition of 'Confidential Information' does include software programs under certain conditions. Specifically, it encompasses 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.' This means that any custom software created by Chatime for use in the franchise is considered confidential.
This has significant implications for a prospective franchisee. They are obligated to protect and maintain the confidentiality of these software programs. This obligation extends to preventing unauthorized use or disclosure of the software to anyone, including employees or other franchisees, unless specifically authorized by Chatime. The franchisee does not gain any ownership or rights to the confidential information, other than the right to use it within the scope of the franchise agreement.
It is important to note the exception for 'commercially available software packages.' This means that if Chatime uses common software like Microsoft Office or QuickBooks, those programs are not considered confidential information under the franchise agreement. The confidentiality applies specifically to software developed or implemented by Chatime itself for the franchise system. Franchisees should clarify with Chatime exactly which software programs are considered confidential and what security measures are required to protect them.