Does the confidentiality covenant in the Crave franchise agreement survive the transfer of the agreement?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
10.2.1 Neither you nor the Principals shall, during the term of this Agreement or thereafter, communicate, divulge or use for the benefit of any other person, persons, partnership, association or corporation and, following the expiration or termination of this Agreement, they shall not use for their own benefit any confidential information, knowledge or know-how concerning the methods of operation of the Franchised Business which may be communicated to them or of which they may be apprised in connection with the operation of the Franchised Business under the terms of this Agreement. You and the Principals shall divulge such confidential information only to such of your employees as must have access to it in order to operate the Franchised Business. Any and all information, knowledge, know-how, techniques and any materials used in or related to the System which we provide to you in connection with this Agreement, including but not limited to the Manual, plans and specifications, marketing information and strategies and site evaluation, selection guidelines and techniques, recipes, and the terms of this Agreement, shall be deemed confidential for purposes of this Agreement. Neither you nor the Principals shall at any time, without our prior written consent, copy, duplicate, record or otherwise reproduce such materials or information, in whole or in part, nor otherwise make the same available to any unauthorized person. The covenants in this Section shall survive the expiration, termination or transfer of this Agreement or any interest herein and shall be perpetually binding upon you and the Principals.
Source: Item 23 — RECEIPTS (FDD pages 63–253)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, the confidentiality covenants outlined in Section 10.2.1 of the franchise agreement do indeed survive the transfer of the agreement. This means that even if the Crave franchise is sold or transferred to a new owner, the original franchisee and their Principals (e.g., owners, partners) remain obligated to protect the confidential information they gained access to during their time operating the franchise. This obligation extends indefinitely, as the covenants are described as "perpetually binding".
This survival clause has significant implications for a prospective Crave franchisee. It ensures that Crave's proprietary information, such as operational methods, recipes, marketing strategies, and the contents of the operations manual, remains protected even after a franchise changes hands. This protects Crave's competitive advantage and the integrity of the franchise system. The franchisee must also ensure that their General Manager and other personnel with access to confidential information also execute similar confidentiality agreements.
Furthermore, if a Principal involved in the franchise is married, their spouse must also agree to a Spouse Confidentiality and Non-Compete Agreement. This highlights the importance Crave places on safeguarding its confidential information and trade secrets. The franchisee is responsible for obtaining these agreements, ensuring comprehensive protection for Crave.
This type of clause is fairly standard in franchise agreements across various industries, as franchisors need to protect their intellectual property and business methods. Prospective franchisees should carefully review these clauses to understand the scope of their confidentiality obligations, both during the term of the agreement and after any transfer or termination.