Does the requirement for Coffee News franchisees to maintain confidentiality extend to stockholders?
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, the confidentiality requirements do extend to stockholders. Franchisees are explicitly required to ensure that their stockholders, along with employees, officers, key personnel, and agents, are bound by confidentiality agreements.
This means that a Coffee News franchisee must have their stockholders sign a non-disclosure or confidentiality agreement. This agreement ensures that stockholders are legally obligated to protect sensitive information related to Coffee News's business operations, trade secrets, and other confidential data. The franchisee is responsible for enforcing these agreements.
If a stockholder breaches the confidentiality agreement, the franchisee can be held liable for damages, including reasonable attorney fees and court costs, if Coffee News has to take legal action to enforce their contractual rights. This underscores the importance of carefully vetting stockholders and ensuring they understand and agree to the confidentiality obligations.
This requirement is fairly standard in franchising, as franchisors need to protect their proprietary information and business methods. By extending the confidentiality requirement to stockholders, Coffee News aims to safeguard its trade secrets and maintain a consistent level of confidentiality across its franchise network.