What must a Chocolate Fish Coffee franchisee do to document the franchisor's ownership of innovations?
Chocolate_Fish_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
- **2.
Confidential Information.** With respect to all Confidential Information Guarantor shall (a) adhere to all security procedures prescribed by Chocolate Fish Franchising for maintaining confidentiality, (b) disclose such information to its employees only to the extent necessary for the operation of the Business; (c) not use any such information in any other business or in any manner not specifically authorized or approved in writing by Chocolate Fish Franchising, (d) exercise the highest degree of diligence and make every effort to maintain the confidentiality of all such information during and after the term of the Franchise Agreement, (e) not copy or otherwise reproduce any Confidential Information, and (f) promptly report any unauthorized disclosure or
use of Confidential Information. Guarantor acknowledges that all Confidential Information is owned by Chocolate Fish Franchising or its affiliates (except for Confidential Information which Chocolate Fish Franchising licenses from another person or entity). Guarantor acknowledges that all customer data generated or obtained by Guarantor is Confidential Information belonging to Chocolate Fish Franchising. This Section will survive the termination or expiration of the Franchise Agreement indefinitely.
3. Covenants Not to Compete.
- (a) Restriction In Term.
During the term of the Franchise Agreement, Guarantor shall not directly or indirectly have any ownership interest in, lend money or provide financial assistance to, provide any services to, or be employed by, any Competitor.
- (b) Restriction Post Term.
For two years after the Franchise Agreement expires or is terminated for any reason (or, if applicable, for two years after a Transfer by Guarantor), Guarantor shall not directly or indirectly have any ownership interest in, lend money or provide financial assistance to, provide any services to, or be employed by, any Competitor located within five miles of Franchisee's Territory or the territory of any other Chocolate Fish Coffee business operating on the date of termination or transfer, as applicable.
If the Franchise Agreement is terminated before the Territory is determined, then the area of non-competition will the Development Area and the territory of any other Chocolate Fish Coffee business operating on the date of termination.
- (c) Interpretation.
Source: Item 23 — RECEIPTS (FDD pages 41–119)
What This Means (2024 FDD)
According to the 2024 Chocolate Fish Coffee Franchise Disclosure Document, the franchisee must acknowledge that all Confidential Information is owned by Chocolate Fish Franchising or its affiliates, except for Confidential Information which Chocolate Fish Franchising licenses from another person or entity. The franchisee also acknowledges that all customer data generated or obtained by Guarantor is Confidential Information belonging to Chocolate Fish Franchising.
This means that any innovations, customer data, or confidential information developed or obtained during the operation of the Chocolate Fish Coffee business automatically becomes the property of the franchisor. The franchisee has no ownership rights to these elements, which is a common practice in franchising to protect the brand and system standards.
This clause ensures that Chocolate Fish Coffee retains control over its intellectual property and customer relationships, even those developed at the local franchise level. This is particularly important for maintaining consistency and protecting the brand's reputation across all franchise locations. The franchisee is essentially acting as a steward of the brand's confidential information and customer data, with the understanding that these assets ultimately belong to the franchisor.
The franchisee must also ensure that their general manager and other key employees sign Chocolate Fish Franchising's then-current form of confidentiality and non-compete agreement (unless prohibited by applicable law).