For City Publications, who is considered a third-party beneficiary with the right to enforce covenants in the nondisclosure agreements?
City_Publications Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee's shareholders, officers, partners, members and managers may be required to execute nondisclosure and confidentiality agreements. Franchisee may be obligated to ensure that each of the foregoing persons execute a nondisclosure and confidentiality agreement at the time this Agreement is executed or prior to such persons becoming shareholders, officers, partners, members or managers, whichever is earlier. Franchisor shall be a third party beneficiary with the right to enforce covenants contained in such agreements. The spouse of each person identified as Franchisee under the terms of this Agreement will be required to sign a nondisclosure and non-competition agreement.
Source: Item 23 — RECEIPT (FDD pages 39–129)
What This Means (2025 FDD)
According to City Publications' 2025 Franchise Disclosure Document, the franchisor, City Publications Franchise Group, Inc., is considered a third-party beneficiary with the right to enforce the covenants contained within the nondisclosure and confidentiality agreements. These agreements may be required to be executed by the franchisee's shareholders, officers, partners, members, and managers. The franchisee may be obligated to ensure these individuals sign the agreements either when the Franchise Agreement is executed or before they assume their respective roles, whichever occurs first.
This provision means that City Publications has the legal right to take action against those individuals covered by the nondisclosure agreements if they breach the terms of those agreements, even though City Publications is not a direct party to those agreements. This is a common practice in franchising to protect the franchisor's confidential information and trade secrets.
Furthermore, the spouse of each person identified as a franchisee is required to sign a non-disclosure and non-competition agreement. This ensures that confidential information is protected even within the franchisee's household and that spouses are also bound by the non-competition terms, preventing potential conflicts of interest or misuse of proprietary information.