Is a Coffee News franchisee required to have its employees sign a non-disclosure agreement?
Coffee_News Franchise · 2025 FDDAnswer from 2025 FDD Document
- 6.2 Use of Trade Secrets. Franchisee shall not directly or indirectly furnish to any other party any confidential information as to the "Coffee News" Format, methods of operation, advertising, promotion, ideas or any other information relating to Franchisor's business of "Coffee News" without the written consent of Franchisor. The provisions contained herein shall survive the termination, expiration, transfer, assignment, of this Agreement. Franchisee shall execute a non-disclosure or confidentiality agreement with its employees, officers, key personnel, agents, or stockholders, as the case may be, that such employees, officers, key personnel, agents, or stockholders, as the case may be, shall be bound by the contractual provisions contained in this paragraph, and will be liable for damages, reasonable attorney fees and court cost if the Franchisor has to enforce their contractual rights by legal actions.
Source: Item 23 — Receipts (FDD pages 36–118)
What This Means (2025 FDD)
According to Coffee News's 2025 Franchise Disclosure Document, franchisees are required to execute a non-disclosure or confidentiality agreement with their employees, officers, key personnel, agents, or stockholders. This agreement ensures that these individuals are bound by the contractual provisions related to confidential information outlined in the franchise agreement.
This requirement means that a Coffee News franchisee must take proactive steps to protect the franchisor's trade secrets and confidential information. This includes implementing a formal non-disclosure agreement and ensuring that all relevant personnel sign and understand it. The agreement should cover the "Coffee News" format, methods of operation, advertising, promotion, ideas, and any other information related to the Coffee News business.
Failure to comply with this requirement can have significant consequences. According to the FDD, if a Coffee News franchisee fails to ensure that their employees, officers, key personnel, agents, or stockholders are bound by the non-disclosure agreement, the franchisee will be liable for damages, reasonable attorney fees, and court costs if Coffee News has to enforce their contractual rights through legal action. This underscores the importance of adhering to this requirement to avoid potential legal and financial repercussions.
Requiring employees to sign non-disclosure agreements is a common practice in franchising, particularly when the franchise involves proprietary information or unique operational methods. This measure helps protect the brand's competitive advantage and ensures consistency across the franchise system. Prospective Coffee News franchisees should factor in the administrative and legal costs associated with implementing and enforcing these agreements.