Under what conditions is a City Wide franchisee's obligation to maintain proprietary information confidential not required?
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 14 — PATENTS, COPYRIGHTS, AND PROPRIETARY INFORMATION (FDD pages 42–43)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, a franchisee's obligation to keep proprietary information confidential has certain exceptions. These exceptions apply if the franchisee notifies City Wide of the exception within 30 days of City Wide disclosing the confidential information.
The first exception is if the franchisee already knew the information before City Wide disclosed it, provided the franchisee identifies it as such. The second exception is if a third party discloses the information to the franchisee, unless that third party had a duty to keep the information confidential or was not in rightful possession of it. Lastly, the obligation does not apply if the information is generally known in the relevant trade. However, for it to be considered generally known, the franchisee must prove that the specific combination of proprietary information disclosed by City Wide is well-known or generally used within the industry.
It is important to note that information is not considered within these exceptions just because it is part of more general information in the public domain or already in the franchisee's possession. Similarly, a combination of features is not exempt simply because the individual features are public knowledge or in the franchisee's possession; the combination itself must be publicly known or in the franchisee's possession. This means that even if some elements of City Wide's system are known, the specific way City Wide combines them remains confidential unless the entire combination is already public knowledge.