What are the exceptions to the confidentiality obligations for Exit franchisees regarding information that is or becomes publicly available?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee acknowledges that it has or will acquire knowledge of confidential matters, Trade Secrets (as defined by applicable state law, as the same may be subsequently amended), recruiting techniques, operational, accounting and quality control procedures, and other methods developed by EXIT through and in its System and that the unique and novel combination of "know how" and methods developed by EXIT and licensed to Franchisee by Subfranchisor, for the real estate service operation, are peculiar to EXIT ("Confidential Information"), which, for purposes of this Agreement, are owned by EXIT, and which are necessary and essential to the operation of the Franchise. Confidential Information shall not apply to information that Franchisee can document (a) is or becomes generally available to the public (through no improper action or inaction by Franchisee); (b) was in Franchisee's possession or known by Franchisee without any limitation on user or disclosure prior to receipt from Franchisor or Subfranchisor; (c) was rightfully disclosed to Franchisee by a third party without restrictions; or (d) as required by court order.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, there are specific exceptions to the confidentiality obligations for franchisees. Exit acknowledges that certain information may not be subject to confidentiality restrictions under specific circumstances.
Specifically, Exit franchisees are not bound by confidentiality regarding information that they can document falls into one of four categories: (a) information that is or becomes generally available to the public through no fault of the franchisee, (b) information that the franchisee already possessed or knew without any restrictions prior to receiving it from Exit or its subfranchisor, (c) information that was rightfully disclosed to the franchisee by a third party without any restrictions, or (d) information that the franchisee is required to disclose by court order.
These exceptions are important for prospective Exit franchisees to understand, as they clarify the scope of their confidentiality obligations. It means that franchisees are not liable for keeping information secret if it was already public knowledge, known to them beforehand without restrictions, legally obtained from another source, or mandated by a court to be revealed. This provides some protection for franchisees against inadvertently breaching the confidentiality agreement.