Under what condition does the restriction on disclosing Cinnaholic's confidential information extend beyond five years after termination or expiration of the agreement?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee 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.
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, the restriction on disclosing confidential information extends beyond five years after the termination or expiration of the franchise agreement if the confidential information rises to the level of a trade secret. In that case, the restriction remains in effect until the information no longer constitutes a trade secret.
This means that while franchisees are generally restricted from disclosing Cinnaholic's confidential information for five years after the agreement ends, this period can be indefinite if the information is deemed a trade secret. Trade secrets are typically formulas, practices, designs, instruments, or a compilation of information that a company uses to gain an advantage over its competitors.
For a prospective Cinnaholic franchisee, this implies a significant long-term responsibility to protect the brand's sensitive information. Even after leaving the Cinnaholic system, franchisees must maintain the confidentiality of any trade secrets they learned during their time as a franchisee. This is a fairly standard clause in franchise agreements, as franchisors need to protect their proprietary information to maintain a competitive edge.