What are the Cinnabon franchisee's obligations regarding the protection of confidential information (Item 9) and how does this relate to the franchisor's ownership of trade secrets (Item 1)?
Cinnabon Franchise · 2025 FDDAnswer from 2025 FDD Document
who can obtain economic value from its disclosure or use. Without limiting the definition of "Trade Secrets," all the following will be conclusively presumed to be Trade Secrets whether or not we designate them as such: (i) the composition of our Proprietary Goods; (ii) our Recipes; (iii) advertising, marketing, and public relations strategies; and (iv) our marketing analyses.
C. The terms "Confidential Information" and "Trade Secret" do not include: (i) information generally known to the public at the time we disclose it to you; (ii) information that becomes known to the public after we disclose it to you, unless it becomes known due to your breach of this Agreement or someone else's breach of a duty to maintain confidentiality; or (iii) information you can prove was within your legitimate and unrestricted possession at the time we disclosed it to you.
15.2 Protection of Confidential Information and Trade Secrets. You agree that the Confidential Information and Trade Secrets are not, by definition, generally known in the trade, that they are beyond your present skill and experience, and that for you to develop the Confidential Information and Trade Secrets on your own would be expensive, time-consuming, and difficult. You agree that the Confidential Information and Trade Secrets provide you with a competitive advantage, that they will be economically valuable to you in the development of your Franchised Business, and that gaining access to Confidential Information and Trade Secrets is therefore a primary reason why you are entering into this Agreement. You specifically agree that these restrictions are applicable even before you open the Franchised Business since you will receive valuable information and training about the System and the operation of the Franchised Business before you begin operations of your Franchised Business. You agree that you are liable under this provision even if you do not open the Franchised Business as this Agreement requires. Accordingly, in consideration of our disclosure of the Confidential Information and Trade Secrets, you agree that:
- A. You and your Owners will not, during the Term:
(i) appropriate or use any Confidential Information or any Trade Secret for any purpose other than in accordance with this Agreement;
(ii) disclose or reveal any portion of the Confidential Information or any Trade Secret to any person, other than to your directors, officers, Owners, management employees, or others who: (a) have a legitimate business need to know of it to operate your Franchised Business, (b) are aware of the confidentiality restrictions in this Agreement, and (c) are similarly bound not to disclose the Confidential Information by an agreement at least as restrictive as the terms of this Agreement; or
(iii) divulge or use any Confidential Information or any Trade Secret for the benefit of any other person or Entity except as we expressly authorize.
B. You and your Owners will not at any time after the termination or expiration of this Agreement: (i) use any Confidential Information for any purpose;
What This Means (2025 FDD)
According to Cinnabon's 2025 Franchise Disclosure Document, franchisees have strict obligations to protect both Confidential Information and Trade Secrets, which are critical to the Cinnabon system. Cinnabon considers these to be beyond the franchisee's current skill and experience, and acknowledges that access to them is a primary reason for entering the Franchise Agreement. Franchisees acknowledge that developing this information independently would be expensive and difficult, and that these secrets provide a competitive advantage.
During the term of the Franchise Agreement, franchisees must not reveal any Confidential Information or Trade Secrets to another person or use it for any other business, even after the agreement expires or is terminated. Franchisees are also prohibited from copying or giving this information to third parties without authorization. These restrictions apply even before the Cinnabon bakery opens, as franchisees receive valuable information and training about the system before operations begin.
Cinnabon defines Trade Secrets as information that has independent economic value from not being generally known or easily ascertainable by others who could obtain value from its disclosure or use. Specific examples of Trade Secrets include the composition of Proprietary Goods, Recipes, advertising, marketing, and public relations strategies, and marketing analyses. Franchisees must also ensure that all employees with access to Confidential Information and Trade Secrets are aware of the confidentiality restrictions and are bound by agreements at least as restrictive as those in the Franchise Agreement.
Furthermore, all ideas, concepts, techniques, or materials relating to a Cinnabon bakery or the system, including modifications of intellectual property, are deemed the sole and exclusive property of Cinnabon. Franchisees must promptly disclose any such Innovations, which are considered works made-for-hire for Cinnabon. If any Innovation does not qualify as a work made-for-hire, the franchisee must assign ownership to Cinnabon and ensure that all relevant parties sign necessary documents to evidence this ownership. Cinnabon is not obligated to make any payments for these Innovations.