Are the confidentiality and non-compete obligations of a Crepe De Licious franchisee extended to the owners of the franchisee?
Crepe_De_Licious Franchise · 2025 FDDAnswer from 2025 FDD Document
iality and non-compete obligations, would be of little value to us if Franchisee's owners were not bound by the same requirements. Under the provisions of the Franchise Agreement, Owners are required to enter into this Owners Agreement as a condition to our entering into the Franchise Agreement with Franchisee. Owners will be jointly and severally liable for any breach of this Owners Agreement.
2. Non-Disclosure and Protection of Confidential Information.
- 2.1 Under the Franchise Agreement, we will provide Franchisee with specialized training, proprietary trade secrets, and other Confidential Information relating to the establishment and operation of a franchised business. The provisions of the Franchise Agreement governing Franchisee's non-disclosure obligations relating to our Confidential Information are hereby incorporated into this Owners Agreement by reference, and Owners agree to comply with each obligation as though fully set forth in this Owners Agreement as a direct and primary obligation of Owners. Further, we may seek the same remedies against Owners under this Owners Agreement as we may seek against Franchisee under the Franchise Agreement. Any and all information, knowledge, know-how, techniques, and other data, which we designate as confidential, will also be deemed Confidential Information for purposes of this Owners Agreement.
- 2.2 Owners acknowledge that they could circumvent the purpose of Section 2.1 by disclosing Confidential Information to an immediate family member (i.e., spouse, parent, sibling, child, or grandchild). Owners also acknowledge that it would be difficult for us to prove whether Owners disclosed the Confidential Information to family members. Therefore, each Owner agrees that he or she will be presumed to have violated the terms of Section 2.1 if any member of his or her immediate family uses or discloses the Confidential Information or engages in any activities that would constitute a violation of the covenants listed in Section 3, below, if performed by Owners. However, Owners may rebut this presumption by furnishing evidence conclusively showing that Owners did not disclose the Confidential Information to the family member.
3. Covenant Not To Compete.
- 3.1 Non-Competition During and After the Term of the Franchise Agreement.
Source: Item 22 — CONTRACTS (FDD page 57)
What This Means (2025 FDD)
According to Crepe De Licious's 2025 Franchise Disclosure Document, the confidentiality and non-compete obligations are extended to the owners of the franchisee. Specifically, the Owners Agreement incorporates the non-disclosure obligations from the Franchise Agreement, making them a direct obligation of the owners. Crepe De Licious can pursue the same legal remedies against the owners as it can against the franchisee for breaches of confidentiality. This ensures that owners are equally bound to protect Crepe De Licious's confidential information.
Owners are also restricted from circumventing these obligations by disclosing confidential information to immediate family members. If an immediate family member uses or discloses confidential information or engages in activities that would violate the non-compete covenants, the owner is presumed to have violated the agreement. However, the owner can rebut this presumption by providing evidence that they did not disclose the confidential information to the family member. This provision aims to prevent indirect breaches of the agreement through family members.
Furthermore, during the time that the owner is a manager or officer of the Crepe De Licious business, they must not unfairly compete with Crepe De Licious by engaging in any prohibited activities. After the relationship ends, the owner is restricted from unfair competition during the restricted period by engaging in any prohibited activities within the restricted territory. These measures are in place to protect Crepe De Licious's market position and proprietary information, ensuring that owners, like franchisees, remain committed to the brand's success and do not exploit confidential information for personal gain.