Does the Cinch I.T. franchisee's indemnification obligation extend beyond the termination of the franchise agreement?
Cinch_I_T Franchise · 2024 FDDAnswer from 2024 FDD Document
NOW, THEREFORE, in consideration of the mutual covenants and obligations contained herein, the parties agree as follows:
Franchisee may disclose to Signer some or all of Franchisor's Trade Secrets relating to CINCH I.T.
SYSTEM.
Signer shall receive Franchisor's Trade Secrets in confidence, maintain them in confidence, and shall use them only in connection with the development and/or maintenance by Franchisee of the Franchised Business using CINCH I.T.
SYSTEM for so long as Franchisee is licensed by Franchisor to use CINCH I.T.
SYSTEM.
Signer shall not at any time make copies of any documents or compilations containing some or all of Franchisor's Trade Secrets without the express written permission of Franchisor.
Signer shall not disclose or permit the disclosure of Franchisor's Trade Secrets to anyone.
That all information and materials, including without limitation, specifications, techniques and compilations of data which Franchisor shall designate as confidential shall be deemed Franchisor's Trade Secrets for the purposes of this Agreement.
Signer shall not, directly or indirectly, do any act or omit to do any act, which would or would likely to be injurious or prejudicial to the goodwill associated with CINCH I.T.
SYSTEM.
Except to the extent prohibited by the laws of the state where the Franchised Business is located or where the Signer lives, in order to protect the goodwill and unique qualities of CINCH I.T.
SYSTEM and the confidentiality and value of Franchisor's Trade Secrets, and in consideration for the disclosure to Signer of Franchisor's Trade Secrets, Signer further undertakes and covenants that, during the time Franchisee is a franchisee of Franchisor and for the two (2) years following the termination or expiration of Franchisee's Franchise Agreement, Signer will not:
Source: Item 23 — RECEIPTS (FDD pages 60–269)
What This Means (2024 FDD)
According to the 2024 Cinch I.T. Franchise Disclosure Document, the franchisee's obligations regarding trade secrets extend beyond the termination of the franchise agreement. Specifically, a 'Signer' (likely referring to someone with access to Cinch I.T.'s trade secrets through the franchisee) agrees to certain restrictions both during the franchise term and for a period of time after termination.
The Signer agrees to maintain the confidentiality of Cinch I.T.'s trade secrets and use them only in connection with the franchised business while the franchisee is licensed. Post-termination, for a period of two years after the franchise agreement ends, the Signer is prohibited from actions that could harm the goodwill of the Cinch I.T. system or exploit the franchisor's trade secrets. This includes refraining from activities that could be injurious or prejudicial to the goodwill associated with Cinch I.T.
This extended obligation is put in place to protect Cinch I.T.'s trade secrets and maintain the integrity of the franchise system. It prevents individuals who have gained knowledge of confidential information during the franchise term from using that information to compete against Cinch I.T. after the franchise relationship ends. Prospective franchisees should carefully review these post-termination obligations and ensure that anyone who gains access to Cinch I.T.'s trade secrets understands and agrees to these restrictions.