Does the Exit franchisee's obligation to protect Confidential Information extend beyond the termination or expiration of the franchise agreement?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee agrees that, during the term of this Agreement and all renewals and extensions of this Agreement, and after termination, expiration, or non-renewal of this Agreement, Franchisee shall hold all Confidential Information that is not a Trade Secret in strictest confidence, shall not use or disclose such Confidential Information (except in the performance of this Agreement), shall diligently protect any and all Confidential Information against loss by inadvertent or unauthorized disclosure, and shall comply with guidelines established by EXIT and Subfranchisor for the purpose of protecting the information.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, the franchisee's obligation to protect Confidential Information extends beyond the termination or expiration of the franchise agreement. Specifically, the franchisee must hold all Confidential Information that is not a Trade Secret in the strictest confidence, and this obligation continues even after the agreement ends. They are prohibited from using or disclosing such Confidential Information, except when performing under the agreement.
Exit franchisees must diligently protect all Confidential Information against loss through inadvertent or unauthorized disclosure. They must also adhere to any guidelines established by Exit and the Subfranchisor aimed at protecting this information. This obligation ensures that the sensitive business information and trade secrets of the Exit franchise system remain protected, even after a franchisee leaves the system.
This requirement is typical in franchising, as franchisors need to safeguard their proprietary information to maintain a competitive advantage and protect the integrity of their brand. Prospective Exit franchisees should understand that this ongoing obligation is a standard part of the franchise agreement and is designed to protect both the franchisor and the network of franchisees.