How does the Degree Wellness FDD define 'Confidential Information' in Section 5?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
5. Confidentiality; Non-Disparagement.
- a. Definitions. Wherever used in this Section 5, the term "Franchisor" shall refer to Franchisor and any affiliate, subsidiary, successor or assign of Franchisor. Wherever used in this Section, the phrase "directly or indirectly" includes, but is not limited to, acting, either personally or as principal, owner, shareholder, employee, independent contractor, agent, manager, partner, joint venturer, consultant, or in any other capacity or by means of any corporate or other device, or acting through the spouse, children, parents, brothers, sisters, or any other relatives, friends, trustees, agents, or associates of any of the Parties. Whenever used in this Section, the term "Confidential Information" shall be defined as provided in Section 9.1 of the Franchise Agreement, which provisions are hereby incorporated by reference, and such term shall also include the terms and conditions hereof.
- b. Consideration. The Parties acknowledge that consideration for this Agreement has been provided and is adequate. The consideration includes, but is not limited to, the granting of the Franchise to Franchisee and/or each Owner, and Franchisor's consent to the Transfer of the Transferred Interest as provided in this Agreement.
- c. Need for this Agreement. The Parties recognize that in the highly competitive business in which Franchisor and its affiliates and franchisees are engaged, preservation of Confidential Information is important in securing new franchisees and employees, and retaining the goodwill of present franchisees, employees, customers, and suppliers.
Franchisee and each Owner recognizes that it has had substantial contact with Franchisor's employees, customers, and suppliers and Confidential Information. For that reason, Franchisee and each Owner may be in a position to take for his or her benefit all or a portion of the Confidential Information now or in the future. If Franchisee or any Owner, after the Transfer of the Transferred Interest as provided in this Agreement, takes advantage of such Confidential Information for Franchisee's or any Owner's own benefit, then the competitive advantage that Franchisor has created through its efforts and investment will be irreparably harmed.
- d.
Source: Item 23 — Receipts (FDD pages 66–257)
What This Means (2025 FDD)
According to Degree Wellness's 2025 Franchise Disclosure Document, Section 5 refers to the definition of 'Confidential Information' as provided in Section 9.1 of the Franchise Agreement, incorporating those provisions by reference. Additionally, the term 'Confidential Information' in Section 5 also includes the terms and conditions of the agreement itself. This means that when evaluating confidentiality obligations within Section 5, franchisees must refer to Section 9.1 of the Franchise Agreement for the detailed scope of what constitutes confidential information.
This incorporation by reference is a common legal drafting technique to avoid redundancy and ensure consistency across different sections of a contract. For a Degree Wellness franchisee, this means understanding the full scope of confidential information requires reviewing both Section 5 and Section 9.1 together. The definition in Section 9.1 likely outlines specific categories of information, materials, and knowledge considered confidential, such as operational manuals, marketing strategies, and customer data.
The FDD also emphasizes the importance of preserving Confidential Information to secure new franchisees and employees, and retain the goodwill of present franchisees, employees, customers, and suppliers. Franchisees acknowledge that they will have substantial contact with Degree Wellness's employees, customers, and suppliers and Confidential Information. The agreement aims to prevent franchisees from using this information for their own benefit after the transfer of interest, which could irreparably harm the competitive advantage that Degree Wellness has created through its efforts and investment.
Therefore, prospective Degree Wellness franchisees should carefully review Section 9.1 of the Franchise Agreement to fully understand what is considered 'Confidential Information' and the obligations associated with maintaining its confidentiality, both during and after the franchise term. This includes understanding the restrictions on use and disclosure, as well as the procedures for preventing unauthorized access to or dissemination of this information.