What is an Exit franchisee required to do when they learn about unauthorized use of Proprietary Information?

According to Exit's 2025 Franchise Disclosure Document, if a franchisee becomes aware of unauthorized use of Exit's Proprietary Information, they must promptly inform Exit. While Exit is not obligated to take any specific action, they will respond to the information as they deem appropriate. Exit retains the right to control any litigation involving its Proprietary Information.

This requirement ensures that Exit can protect its brand, Training Manuals, and other confidential information. By promptly reporting any unauthorized use, franchisees play a crucial role in safeguarding Exit's intellectual property and maintaining the integrity of the Exit system. This obligation is part of a broader set of responsibilities franchisees have to protect Exit's confidential information, as detailed elsewhere in the FDD.

For a prospective franchisee, this means being vigilant about protecting Exit's Proprietary Information and having a system in place to detect and report any potential misuse. While Exit will handle any legal action, the franchisee's prompt reporting is essential for initiating the process. This also highlights the importance of understanding what constitutes Proprietary Information under the franchise agreement.

Exit also states that they will defend the franchisee against claims from a third party concerning the franchisee's use of the Proprietary Information.