Under what circumstances is a Developer allowed to disclose Cinnaholic's proprietary or confidential information?
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 Developer is restricted from disclosing or publishing any of Cinnaholic's proprietary or confidential information to any party. However, there are two exceptions to this rule. First, a Developer may disclose confidential information if it is required to carry out their obligations under the Development Agreement. Second, disclosure is permitted if Cinnaholic has given express written approval for the Developer to do so.
This means that a Cinnaholic Developer must maintain the confidentiality of Cinnaholic's business practices, operational manuals, and other sensitive information. This obligation extends not only to the Developer but also to each Bound Party, which includes the Developer's spouse, and if the Developer is not an individual, its shareholders, members, partners, and managers, as applicable, and their spouses.
The restriction on disclosing confidential information remains in effect while the Development Agreement is active. Even after the agreement terminates or expires, the restriction continues for five years, especially for information not considered a trade secret. If the confidential information rises to the level of a trade secret, the restriction remains in effect until the information no longer constitutes a trade secret. Developers must also take steps to protect Cinnaholic's confidential information from unauthorized access or use by employees and agents.