What happens if a Counselor Realty franchisee violates the confidentiality agreement?
Counselor_Realty Franchise · 2025 FDDAnswer from 2025 FDD Document
on and best efforts to the management and operation of your Business.
- (b) During and after the term of this Agreement, you shall not disclose to a third party or use, except to operate the Business during the term of this Agreement, any confidential or proprietary information, or trade secret, that we own or disclose to you. You must require your Business manager (if any) and agents to sign a corresponding confidentiality agreement. You must return the entire Franchise Policy Guidelines to us promptly upon termination or expiration of this Agreement or any transfer.
- (c) During the term of this Agreement, you will not own any interest in, or work for, engage in or assist, directly or indirectly, any real estate brokerage service business other than Counselor, or that competes with Counselor, at or within 50 miles of the Office (or any Additional Office or Extension Office) without Counselor's prior written approval.
Source: Item 22 — CONTRACTS (FDD page 32)
What This Means (2025 FDD)
The 2025 Franchise Disclosure Document for Counselor Realty specifies that franchisees are bound by confidentiality agreements, but it does not explicitly detail the consequences of violating this agreement. The agreement mandates that during and after the franchise term, franchisees must not disclose or use any confidential or proprietary information or trade secrets, except to operate the business during the term of the agreement. Franchisees are also required to ensure their business managers and agents sign similar confidentiality agreements.
While the FDD does not outline specific penalties for breaches of confidentiality, it does state that unauthorized or improper use of the Counselor Realty system may cause irreparable harm to Counselor Realty and its franchisees. This suggests that Counselor Realty could pursue legal remedies such as injunctive relief to prevent further disclosure or use of confidential information, and potentially seek damages to compensate for any losses resulting from the breach. Termination of the franchise agreement is also a possible consequence, as the agreement emphasizes the importance of protecting the system and confidential information.
Given the lack of specific details in the FDD regarding the consequences of violating the confidentiality agreement, a prospective Counselor Realty franchisee should seek clarification from the franchisor. Specifically, they should inquire about the types of actions that would be considered breaches of confidentiality, the potential legal and financial repercussions of such breaches, and any prior instances where franchisees have faced penalties for violating confidentiality agreements. Understanding these details is crucial for assessing the risks associated with the franchise and ensuring compliance with the agreement.