Does Dryject have the authority to create obligations on behalf of its franchisees?
Dryject Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 8: BUSINESS RELATIONSHIP]
WHEREAS, it is anticipated that Signer may have access to learn Franchisor's Trade Secrets as Franchisee develops and maintains Franchisee's Business using DRYJECT SYSTEM.
NOW, THEREFORE, in consideration of the mutual covenants and obligations contained herein, the parties agree as follows:
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- Franchisee may disclose to Signer some or all of Franchisor's Trade Secrets relating to DRYJECT SYSTEM.
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- Signer shall receive Franchisor's Trade Secrets in confidence, maintain them in confidence, and shall use them only in connection with the development and/or maintenance by Franchisee of the Franchised Business using DRYJECT SYSTEM for so long as Franchisee is licensed by Franchisor to use DRYJECT SYSTEM.
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- Signer shall not at any time make copies of any documents or compilations containing some or all of Franchisor's Trade Secrets without the express written permission of Franchisor.
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- Signer shall not disclose or permit the disclosure of Franchisor's Trade Secrets to anyone.
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- That all information and materials, including without limitation, specifications, techniques and compilations of data which Franchisor shall designate as confidential shall be deemed Franchisor's Trade Secrets for the purposes of this Agreement.
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- Signer shall not, directly or indirectly, do any act or omit to do any act, which would or would likely to be injurious or prejudicial to the goodwill associated with DRYJECT SYSTEM.
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- Except to the extent prohibited by the laws of the state where the Franchised Business is located, in order to protect the goodwill and unique qualities of DRYJECT SYSTEM and the confidentiality and value of Franchisor's Trade Secrets, and in consideration for the disclosure to Signer of Franchisor's Trade Secrets, Signer further undertakes and covenants that, during the time Franchisee is a franchisee of Franchisor and for the two (2) years following the termination or expiration of Franchisee's Franchise Agreement, Signer will not:
- (a) Directly or indirectly, for himself/herself or through, on behalf of or in conjunction with any person, partnership or business entity, engage in or acquire any financial or beneficial interest in (including interest in business entities, partnerships, trusts, unincorporated associations or joint ventures), advise, help or make loans to any entity involved in business which is the same as or similar to that conducted by "DryJect"® which business is, or is intended to be located, within the United States; or
Source: Item 8 — BUSINESS RELATIONSHIP (FDD pages 68–229)
What This Means (2025 FDD)
Based on the 2025 Dryject Franchise Disclosure Document, Dryject can establish obligations for its franchisees through agreements with third parties, specifically concerning trade secrets. These obligations primarily arise in the context of protecting Dryject's confidential information and system standards. Franchisees are required to ensure that their employees and contractors, referred to as 'Signer' or 'Trainee,' enter into agreements that protect Dryject's trade secrets and prevent unfair competition. These agreements impose restrictions on the 'Signer' or 'Trainee,' such as non-disclosure and non-competition clauses, which extend even after their association with the franchisee ends.
Dryject's ability to create these obligations is tied to the franchisee's use of the Dryject system and trade secrets. The agreements with employees and contractors are designed to safeguard the Dryject system's goodwill and unique qualities. Franchisees must ensure that their employees and contractors adhere to these agreements, and Dryject has the right to enforce these provisions directly against the employees or contractors in case of a breach. This enforcement can include seeking injunctions and specific performance, highlighting Dryject's active role in protecting its interests.
This arrangement is typical in franchising, where franchisors need to protect their brand and operational methods. By requiring franchisees to have their employees and contractors sign agreements, Dryject ensures a consistent level of protection across all franchise locations. However, it also places a responsibility on the franchisee to manage and enforce these agreements, as well as to ensure that their employees and contractors understand their obligations. The franchisee's failure to ensure compliance by their employees can result in legal action against both the franchisee and the employee or contractor.
For a prospective Dryject franchisee, this means understanding the importance of these agreements and the need to diligently manage their employees' and contractors' compliance. It also highlights the potential legal ramifications if these agreements are breached. Franchisees should consult with legal counsel to ensure that these agreements are enforceable in their specific jurisdiction and that they are properly implemented and managed within their business operations.