Can Cicis require franchisees to have their employees and contractors execute individual undertakings regarding confidentiality?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
(viii) knowledge of the operating results and financial performance of your Cicis Restaurant.
You and your owners will not acquire any interest in the Confidential Information other than the right to use it in operating the Restaurant. You must maintain the absolute confidentiality of the Confidential Information during and after the expiration or termination of the Franchise Agreement. You and your Owners, your employees and independent contractors must adopt and implement reasonable procedures to prevent unauthorized use or disclosure of the Confidential Information. You and your owners can divulge this Confidential Information only to individuals or entities specifically authorized by us in advance, or to your employees or contractors who must have access to it to operate the Restaurant, however, such individuals or entities must be under a duty of confidentiality no less restrictive than your obligations to us under the Franchise Agreement. We may require you to have your employees and contractors execute individual undertakings and shall have the right to regulate the form of and be a party to or third-party beneficiary under any such agreements. Neither you nor your owners are permitted to make unauthorized copies, record or otherwise reproduce the materials or information or make them available to any unauthorized person.
Source: Item 14 — PATENTS, COPYRIGHTS, AND PROPRIETARY INFORMATION (FDD pages 42–43)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, Cicis can require franchisees to have their employees and contractors sign individual confidentiality agreements. Cicis retains the right to regulate the form of these agreements and can be a party to or a third-party beneficiary under them. This ensures that Cicis has direct recourse if a franchisee's employee or contractor breaches confidentiality.
This requirement is tied to the protection of Cicis's Confidential Information, which includes growth and development plans, site selection criteria, training materials, system standards, vendor information, proprietary software, customer data, and financial performance data of Cicis Restaurants. Franchisees must maintain the absolute confidentiality of this information during and after the term of the Franchise Agreement. Franchisees are responsible for implementing reasonable procedures to prevent unauthorized use or disclosure of this information by their employees and independent contractors.
Practically, this means that a prospective Cicis franchisee must be prepared to ensure that all employees and contractors who have access to Cicis's Confidential Information sign legally binding confidentiality agreements. These agreements must be no less restrictive than the franchisee's own confidentiality obligations to Cicis. The franchisee may need to manage the administrative burden of creating, distributing, and collecting these agreements, and should also be prepared to enforce them if necessary. Cicis's involvement as a party or third-party beneficiary gives them additional enforcement power.
This is a fairly standard practice in franchising, particularly when dealing with proprietary systems and trade secrets. It protects the franchisor's intellectual property and competitive advantage. A prospective franchisee should carefully review the form of agreement that Cicis requires to understand the scope of the confidentiality obligations and ensure they can comply with the requirement.