Is a Cream franchisee responsible for a violation of the confidentiality requirement by any person to whom they provide Confidential Information?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
You and your owners will (and to use each of your best efforts to cause each of your respective current and former spouses, immediate family members, owners, officers, directors, employees, representatives, affiliates, successors and assigns to): (i) process, retain, use, collect, and disclose our Confidential Information strictly to the limited extent, and in such a manner, as necessary for the development and operation of your Shop in accordance with the Franchise Agreement; (ii) process, retain, use, collect, and disclose our Confidential Information strictly in accordance with the privacy policies and system standards we establish, and our and our representative's instructions; (iii) keep confidential and not disclose, sell, distribute, or trade our Confidential Information to any person other than those of your employees and representatives who need to know such Confidential Information for the purpose of assisting you in operating your Shop in accordance with the Franchise Agreement (you will be responsible for any violation of this requirement by any person to whom you provide Confidential Information); (iv) not make unauthorized copies of any of our Confidential Information; (v) adopt and maintain administrative, physical and technical safeguards to prevent unauthorized use or disclosure of any of our Confidential Information, including by establishing reasonable security and access
Source: Item 14 — PATENTS, COPYRIGHTS, AND PROPRIETARY INFORMATION (FDD pages 40–42)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, franchisees bear responsibility for any breaches of confidentiality by individuals to whom they disclose Cream's Confidential Information. This includes employees and representatives who need access to the information to assist in operating the Cream shop, as outlined in the Franchise Agreement.
This stipulation places a significant burden on Cream franchisees to ensure that anyone with access to Cream's Confidential Information understands and adheres to the confidentiality requirements. Franchisees must implement measures to prevent unauthorized use or disclosure, such as establishing security protocols, limiting access to key personnel, and requiring individuals to sign confidentiality agreements. Cream may also designate or approve the form of confidentiality agreement that franchisees must use.
The definition of Confidential Information is broad, encompassing various aspects of the Cream franchise system, including site selection criteria, training materials, operational methods, recipes, marketing programs, supplier information, software, financial performance data, and customer data. Franchisees must treat all such information as confidential and protect it from unauthorized disclosure.
This requirement is fairly standard in franchising, as franchisors need to protect their proprietary information and trade secrets. However, the extent of liability placed on the franchisee can vary. Prospective Cream franchisees should carefully review the Franchise Agreement and understand the full scope of their obligations regarding confidentiality and the potential consequences of a breach.