Under what condition is a Chatime developer or guarantor legally compelled to disclose confidential information?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
- (3) Notwithstanding anything to the contrary contained in this Agreement, the restrictions set out in clause 6.1(2) will not apply to information that:
- (a) Is or becomes publicly available, other than by breach of this Agreement;
- (b) Developer or Guarantor (as applicable) is legally compelled to disclose, provided Developer/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, a Chatime developer or guarantor may be legally compelled to disclose confidential information. However, this is under specific conditions.
The agreement states that the restrictions on using and maintaining the confidentiality of Chatime's confidential information do not apply if the developer or guarantor is legally compelled to disclose it. However, before disclosing the information, the developer or guarantor must use their best efforts to obtain a protective order or another assurance from the Franchisor that ensures confidential treatment of the information. This step is necessary to protect Chatime's interests, even when disclosure is legally required.
This clause ensures that Chatime's confidential information remains protected to the greatest extent possible, even when faced with legal requirements for disclosure. It balances the need for legal compliance with the franchisor's interest in maintaining the secrecy of its proprietary information.
For a prospective Chatime franchisee, this means understanding the importance of protecting confidential information but also knowing the steps to take if legally required to disclose it. Adhering to the required procedure of seeking a protective order is crucial to remaining in compliance with the franchise agreement.