What is the Devon Creek franchisee obligated to do if the Covenantor breaches the franchise agreement?
Devon_Creek Franchise · 2024 FDDAnswer from 2024 FDD Document
WHEREAS, Franchisee has acknowledged the importance of restricting the use, access and dissemination of the Confidential Information, and Franchisee therefore has agreed to obtain from Covenantor a written agreement protecting the Confidential Information and further protecting the System against unfair competition; and
WHEREAS, Covenantor acknowledges that receipt of and the right to use the Confidential Information constitutes independent valuable consideration for the representations, promises and covenants made by Covenantor herein.
NOW, THEREFORE, in consideration of the mutual covenants and obligations contained herein, the parties agree as follows:
1. Confidentiality Agreement.
Source: Item 22 — CONTRACTS (FDD page 45)
What This Means (2024 FDD)
According to Devon Creek's 2024 Franchise Disclosure Document, the franchisee has agreed to obtain a written agreement from the Covenantor protecting the confidential information and further protecting the Devon Creek system against unfair competition. The franchisee acknowledges the importance of restricting the use, access, and dissemination of confidential information. The franchisee is involved in ensuring the Covenantor adheres to confidentiality and non-compete obligations. The franchisee must make sure the Covenantor understands and agrees to protect Devon Creek's confidential information and goodwill.
If the Covenantor breaches the agreement, the franchisee may need to take steps to enforce the agreement, potentially including legal action, although the FDD does not explicitly detail the franchisee's specific obligations in such a scenario. The franchisor, Devon Creek, as a third-party beneficiary, can take action to enforce the Covenantor's obligations. The franchisee's obligations are tied to ensuring the Covenantor's compliance with confidentiality and non-compete terms to protect the Devon Creek system.
While the FDD specifies the Covenantor's duties regarding confidentiality and non-competition, it does not explicitly state the franchisee's direct obligations if the Covenantor breaches the agreement. The franchisee's primary responsibility is to obtain the agreement from the Covenantor, ensuring they understand their obligations. However, the franchisor retains the right to enforce the agreement directly against the Covenantor. A prospective franchisee should seek clarification from Devon Creek regarding their specific responsibilities and potential liabilities in the event of a breach by the Covenantor.