Under what circumstances are the confidentiality restrictions outlined in clause 8.1(2) of the Chatime franchise agreement not applicable?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
8 Confidential Information
- 8.1 Obligation to Maintain Confidentiality
- (1) Franchisee and Guarantor acknowledge and agree that neither Franchisee nor any Guarantor will acquire any interest in the Confidential Information, other than the right to utilize the Confidential Information in performing their obligations under this Agreement, and that the use or duplication of any Confidential Information would constitute an unfair method of competition.
- (2) Franchisee and Guarantor hereby agree that during the term of this Agreement and following the expiration or termination of this Agreement that they:
- (a) Will not use the Confidential Information in any other business operation or capacity;
- (b) Will maintain the absolute confidentiality of the Confidential Information;
- (c) Will not make unauthorized copies of any portion of the Confidential Information;
- (d) Will adopt and implement all reasonable procedures that Franchisor prescribes from time to time to prevent unauthorized use or disclosure of the Confidential Information including, without limitation, restrictions on the disclosure of the Confidential Information to Outlet personnel and others; and
- (3) Notwithstanding anything to the contrary contained in this Agreement, the restrictions set out in clause 8.1(2) will not apply to information that:
- (a) Is or becomes publicly available, other than by breach of this Agreement;
- (b) Franchisee or Guarantor (as applicable) is legally compelled to disclose, provided Franchisee/Guarantor must have used its best efforts and afforded Franchisor the opportunity to obtain an appropriate protective order or other assurance satisfactory to Franchisor of confidential treatment for the information required to be disclosed; or
- (c) Is otherwise permitted under the terms of this Agreement.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, clause 8.1(2) outlines specific confidentiality obligations for the franchisee and guarantor, which include restrictions on using, copying, or disclosing confidential information. However, these restrictions do not apply under certain conditions.
Specifically, the confidentiality restrictions in clause 8.1(2) of the Chatime franchise agreement do not apply if the information is or becomes publicly available through no fault of the franchisee or guarantor. This means if the information enters the public domain independently, the franchisee is not bound by the confidentiality restrictions.
Additionally, the restrictions do not apply if the franchisee or guarantor is legally compelled to disclose the information. However, they must first make their best effort to obtain a protective order or assurance from the franchisor that the information will be treated confidentially. Finally, the restrictions do not apply if the disclosure is otherwise permitted under the terms of the franchise agreement itself, meaning the agreement may have specific clauses allowing certain disclosures.