What is a Bound Party prohibited from doing with Cinnaholic's proprietary or confidential information while the agreement is in effect?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
- (ii) Developer and each Bound Party agree that while this Agreement remains in effect such party will not, directly or indirectly, disclose or publish to any party, or copy or use for such party's own benefit, or for the benefit of any other party, any of Franchisor's proprietary or confidential information, except as required to carry out Developer's obligations under this Agreement or as Franchisor has otherwise expressly approved in writing. All proprietary and confidential information of Franchisor is the sole and exclusive property of Franchisor. Developer and each Bound Party agree that the restriction contained in the preceding sentence will remain in effect with respect to the confidential information for five years following termination or expiration of this Agreement for any reason; provided, however, if the confidential information rises to the level of a trade secret, then such restriction shall remain in effect until such time as the information does not constitute a trade secret. Developer also agrees that it and all of its employees and agents will take appropriate steps to protect Franchisor's confidential information from any unauthorized disclosure, copying or use. At any time upon Franchisor's request, and in any event upon termination or expiration of this Agreement, Developer will immediately return any copies of documents where there are materials containing confidential information and will take appropriate steps to permanently delete and render unusable any confidential information stored electronically.
Source: Item 23 — RECEIPT (FDD pages 62–269)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, a Bound Party is restricted from certain activities regarding the brand's confidential information while the franchise agreement is active. Specifically, Bound Parties are prohibited from directly or indirectly disclosing or publishing Cinnaholic's proprietary or confidential information to any party. They also cannot copy or use this information for their own benefit or for the benefit of any other party. The only exceptions are if it's required to fulfill their obligations under the agreement or if Cinnaholic has given explicit written approval.
This restriction is significant because it protects Cinnaholic's trade secrets and confidential business practices. The FDD clarifies that all proprietary and confidential information belongs exclusively to Cinnaholic. This encompasses elements of the Cinnaholic system, including data within the operations manuals, which are presumed confidential. Franchisees and Bound Parties must also take steps to protect this information from unauthorized access or use.
These restrictions extend beyond the agreement's term. The agreement states that the restrictions on confidential information remain in effect for five years after the agreement expires or terminates. However, if the confidential information qualifies as a trade secret, the restriction lasts as long as the information remains a trade secret. Upon termination or expiration, franchisees must return or destroy all confidential information.
Bound Parties are defined as the franchisee's spouse, and if the franchisee is not an individual, its shareholders, members, partners and managers, as applicable, and their spouses. Cinnaholic requires each Bound Party to sign a Personal Covenants agreement, agreeing to be personally bound by the confidentiality and non-compete provisions. This ensures that all key individuals associated with the franchise are legally obligated to protect Cinnaholic's interests.