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What happens if a Cream franchisee fails to notify Cream immediately of a suspected data breach?

Cream Franchise · 2025 FDD

Answer from 2025 FDD Document

All Confidential Information will be owned by us or our affiliates (other than personally identifiable information relating to the employees, officers, contractors, owners or other personnel of you, your affiliates, or your Jeni's Ice Creams Scoop Shop, and/or such other personally identifiable information designated by us from time to time). You acknowledge and agree that: (1) you will not acquire any interest in any of our Confidential Information, other than the right to use it as we specify under this Agreement or the Franchise Agreements you sign, in each case in accordance with the terms of such agreement; and (2) our Confidential Information is proprietary, includes our trade secrets, and is disclosed to you only on the condition that you will protect it. You acknowledge that any unauthorized use or disclosure of our Confidential Information would be an unfair method of competition and a breach of trust and confidence and will result in irreparable harm to us and/or our affiliates. You and your owners agree to (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):

  • (a) process, retain, use, collect, and disclose our Confidential Information strictly to the limited extent, and in such a manner, as necessary for exercise of your Development Rights in accordance with this Agreement, and/or the operation of Jeni's Ice Creams Scoop Shops under the respective Franchise Agreements, and not for any other purpose of any kind;
  • (b) process, retain, use, collect, and disclose our Confidential Information strictly in accordance with the privacy policies and standards we establish from time to time, and our and our representative's instructions;
  • (c) 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 exercising your Development Rights in accordance with this Agreement, and/or operating Jeni's Ice Creams Scoop Shops in accordance with Franchise Agreements with us; and you agree that you will be responsible for any violation of this requirement by any person to whom you provide Confidential Information;
    • (d) not make unauthorized copies of any of our Confidential Information;

Source: Item 23 — RECEIPTS (FDD pages 61–192)

What This Means (2025 FDD)

Based on the 2025 FDD, the document does not explicitly state the consequences of a Cream franchisee failing to immediately notify Cream of a suspected data breach. However, the FDD does state that franchisees must protect Cream's confidential information and adhere to privacy policies and standards.

Item 23 outlines various scenarios that can lead to termination of the franchise agreement if the franchisee fails to comply, such as failing to maintain required insurance or violating covenants related to proprietary information. While a data breach notification isn't specifically mentioned, a failure to report a breach could potentially be construed as a violation of the franchisee's obligation to protect Cream's confidential information, especially customer data.

Therefore, while the FDD does not directly address the penalty for failing to report a data breach, it is possible that such a failure could lead to termination of the franchise agreement under the general provisions regarding compliance and protection of confidential information. A prospective franchisee should seek clarification from Cream regarding the specific protocols and penalties related to data breach reporting to fully understand their obligations.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.