Does the Closet Storage Concepts Transfer Agreement address the issue of confidentiality?
Closet_Storage_Concepts Franchise · 2025 FDDAnswer from 2025 FDD Document
Spouses of Franchisees must sign the Confidentiality, Non-Disclosure and Non-Competition Agreement in the form attached as Exhibit "3(b)".
- 6.4.4 Employees. Franchisee shall require its officers, directors, equity owners, employees (to the extent the employee has received Franchisor's initial training) and members of the immediate family of Franchisee, its officers, directors and equity owners to execute a confidentiality agreement containing provisions similar to those set forth in this Agreement.
Our current form of confidentiality agreement is attached to this Agreement as Exhibit "3(a) and 3(b)".
- 6.4.5 Publicly-Owned Entity.
This Section 6.4 shall not apply to any ownership by Franchisee or any other person subject to Section 6.4 of a beneficial interest of less than 5% in the outstanding securities or partnership interests in any publicly-held entity.
- 6.5 Telephone.
Franchisee shall obtain at its own expense a new telephone number and listing, to be listed under the Closet & Storage Concepts name and not under Franchisee's corporate, partnership, or individual name, to be used exclusively in connection with Franchisee's operation of the Franchised Business.
Upon the expiration and nonrenewal, transfer or termination of this Agreement for any reason, Franchisee shall terminate its use of such telephone number and listing and assign same to Franchisor or its designee.
The Franchised Business shall be serviced by a suitable telephone system approved by Franchisor.
Franchisee shall answer the telephone in the manner set forth by Franchisor in the Operations Manual.
Franchisee must execute Franchisor's form of Telephone, Internet Websites and Listing Agreement a copy of which is attached hereto as Exhibit 11.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2025 FDD)
According to the 2025 Closet Storage Concepts Franchise Disclosure Document, the franchise agreement emphasizes the importance of maintaining the confidentiality of proprietary information. Closet Storage Concepts considers its system, which includes trade secrets, specifications, and business practices, as confidential. The agreement ensures that franchisees and their employees acknowledge and agree to protect this information.
Closet Storage Concepts requires franchisees to ensure that their employees, officers, directors, equity owners, and immediate family members sign confidentiality agreements. These agreements contain provisions similar to those in the franchise agreement, reinforcing the obligation to keep the franchisor's confidential information secure. Spouses of franchisees are also required to sign a Confidentiality, Non-Disclosure, and Non-Competition Agreement, further extending the circle of those bound by these confidentiality terms.
The FDD specifies that all data pertaining to the franchised business, including customer data, is owned exclusively by Closet Storage Concepts. Upon termination of the agreement, franchisees lose all rights to access or use this information. Franchisees are also prohibited from contesting Closet Storage Concepts' ownership of its trade secrets and proprietary materials. This comprehensive approach to confidentiality aims to protect the Closet Storage Concepts system and maintain its competitive advantage.