Does the non-compete agreement for Coffee News apply to stockholders of a franchisee that is a business entity?

According to the 2025 Coffee News Franchise Disclosure Document, franchisees must ensure that certain parties, including stockholders, agree to be bound by confidentiality and non-disclosure agreements. Specifically, franchisees are required to have their employees, officers, key personnel, agents, or stockholders execute a non-disclosure or confidentiality agreement. This agreement ensures these individuals are contractually bound by the provisions in paragraph 6.2 of the franchise agreement, which relates to the use of trade secrets.

This requirement means that if you operate your Coffee News franchise through a corporation or other business entity, you must ensure that your stockholders sign a non-disclosure or confidentiality agreement. This agreement prevents them from disclosing confidential information about the Coffee News format, methods of operation, advertising, promotion, ideas, or any other information related to Coffee News's business. The agreement remains in effect even after the termination, expiration, transfer, or assignment of the franchise agreement.

If a stockholder breaches the non-disclosure or confidentiality agreement, the franchisee will be liable for damages, reasonable attorney fees, and court costs if Coffee News has to take legal action to enforce its contractual rights. This provision underscores the importance of carefully managing who has access to Coffee News's confidential information and ensuring they are legally obligated to protect it.

This requirement is fairly standard in franchising, as franchisors need to protect their trade secrets and operational methods. Prospective Coffee News franchisees should carefully review the non-disclosure agreement and ensure they understand their obligations to protect Coffee News's confidential information and to have their stockholders and other relevant parties sign the required agreements.