What is the duration of the restriction on disclosing Cinnaholic's confidential information after the termination or expiration of the Franchise Agreement?
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, the agreement specifies the duration of confidentiality restrictions following the termination or expiration of the Franchise Agreement. Cinnaholic's developers and bound parties are restricted from disclosing or using the franchisor's proprietary or confidential information for a period of five years after the agreement ends. This restriction applies regardless of the reason for termination or expiration.
However, there is an exception: if the confidential information qualifies as a trade secret, the restriction remains in effect as long as the information retains its status as a trade secret. This means the confidentiality obligation could potentially extend indefinitely for trade secrets, surpassing the standard five-year limit applied to other confidential information.
This clause aims to protect Cinnaholic's competitive advantage by preventing former franchisees from using sensitive information to benefit themselves or competitors. Franchisees should understand that these post-termination obligations are significant and could impact their future business activities. It is also important to note that Cinnaholic can request the franchisee to return or delete any documents containing confidential information upon termination or expiration of the agreement.