Under what circumstances is a City Wide franchisee NOT obligated to maintain the confidentiality of information disclosed by City Wide?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
9.1 Franchisee acknowledges that Franchisee's entire knowledge of the operation of a Franchised Business, including the knowledge, or know-how regarding the specifications, standards and operating procedures of the services and activities, is derived from information disclosed to Franchisee by CITY WIDE and that certain of such information is proprietary, confidential and a trade secret of CITY WIDE ("Confidential Information"). Franchisee will maintain the absolute confidentiality of all such Confidential Information during and after the Term and will not use any such information in any other business or in any manner not specifically authorized or approved in writing by CITY WIDE. However, Franchisee's obligation to maintain the confidentiality of such Confidential Information is subject to the following exceptions: (i) such information was previously known by Franchisee prior to disclosure by CITY WIDE if Franchisee identifies such information as previously known; (ii) information disclosed to Franchisee by a third party, unless the third party is under a duty not to disclose or use the information, or unless the third party is not in rightful possession of such information; or (iii) information generally known in the pertinent trade; such information shall be deemed generally known only if Franchisee can establish that the full particulars of the proprietary information in the combination disclosed to Franchisee is well known or generally used within the trade or industry.
Exceptions (i) to (iii) above will apply only if Franchisee notifies CITY WIDE of the pertinent exception within thirty (30) days after CITY WIDE discloses to Franchisee any Confidential Information.
In this Section, Confidential Information will not be considered to fall within the exceptions above merely because such information is embraced by or is part of more general information in the public domain or in Franchisee's possession. In addition, any combination of features will not be deemed to be within the foregoing exceptions merely because individual features are in the public domain and are in Franchisee's possession, but only if the combination itself, its principal of operation, knowledge or ability are in the public domain or in Franchisee's possession.
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, a franchisee is generally required to maintain the confidentiality of information disclosed by City Wide, both during and after the term of the franchise agreement. This includes knowledge related to the operation of the franchised business, specifications, standards, and operating procedures. However, there are specific exceptions to this obligation.
The franchisee is not obligated to maintain confidentiality if the information was already known to them prior to its disclosure by City Wide, provided they identify such information as previously known. Similarly, if the information is disclosed to the franchisee by a third party who is not under a duty of confidentiality and is in rightful possession of the information, the franchisee is not bound by confidentiality. Lastly, information generally known in the pertinent trade is also exempt, but only if the franchisee can establish that the full particulars of the proprietary information are well-known or generally used within the trade or industry.
It's important to note that these exceptions apply only if the franchisee notifies City Wide of the pertinent exception within 30 days after City Wide discloses the confidential information. Furthermore, information is not considered to fall within these exceptions merely because it is part of more general information in the public domain or in the franchisee's possession. The combination of features will not be deemed within the exceptions merely because individual features are in the public domain, but only if the combination itself is in the public domain or in the franchisee's possession. This highlights the importance of documenting any prior knowledge or third-party sources of information to avoid potential disputes with City Wide regarding confidentiality obligations.