Is Degree Wellness a third-party beneficiary of the covenants and agreements related to Confidential Information?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
Licensed Provider agrees, and Licensed Provider therefore does agree, that Licensed Provider (1) will not use, directly or indirectly, the Confidential Information in any business or capacity or for any purpose other than as needed in the performance of the Licensed Provider Services pursuant to and in accordance with this Agreement during and after the Agreement Term; (2) will maintain the absolute confidentiality of the Confidential Information during and after the Agreement Term and not directly or indirectly publish or otherwise disclose it to any third party; (3) will not make unauthorized copies of any portion of the Confidential Information disclosed in written form or another form or media that may be copied or duplicated; and (4) will adopt and implement all reasonable procedures, including any that Degree Wellness or Management Company may prescribe from time to time, to prevent unauthorized use or disclosure of the Confidential Information, including without limitation restrictions on disclosure to or by Licensed Provider's employees, and the use of non-disclosure, non-solicitation, non-disparagement and noncompetition agreements Degree Wellness or Management Company may prescribe or approve for Licensed Provider's owners, officers, directors, employees, independent contractors, or agents who may have access to the Confidential Information. Licensed Provider and Management Company acknowledge and agree that Degree Wellness is a third-party beneficiary of the foregoing covenants and agreements, but that Degree Wellness is under no duty or obligation to Licensed Provider or Management Company to enforce any such agreements for its or Degree Wellness's benefit. Licensed Provider's duties and obligations with respect to the Confidential Information shall survive the termination or expiration of this Agreement.
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 63–66)
What This Means (2025 FDD)
According to the 2025 Degree Wellness Franchise Disclosure Document, Degree Wellness is indeed a third-party beneficiary of the covenants and agreements related to confidential information. The Licensed Provider agrees to protect the confidentiality of Degree Wellness's proprietary information, and Degree Wellness benefits from these protections. However, Degree Wellness has no obligation to enforce these agreements for the benefit of the Licensed Provider or the Management Company.
Specifically, the Licensed Provider agrees not to use the confidential information in any business other than the Degree Wellness franchise, to maintain absolute confidentiality, not to make unauthorized copies, and to implement procedures to prevent unauthorized use or disclosure. These obligations extend both during and after the term of the agreement. This ensures that Degree Wellness's trade secrets and confidential information remain protected, even if the relationship with the Licensed Provider ends.
This third-party beneficiary status grants Degree Wellness the right to directly enforce these confidentiality agreements against the Licensed Provider, providing an additional layer of protection for its valuable proprietary information. This is a common practice in franchising, as franchisors need to safeguard their intellectual property and business methods across the entire franchise system. The Licensed Provider's obligations regarding confidential information survive the termination or expiration of the agreement, further emphasizing the importance of these protections for Degree Wellness.