Under what circumstances is an Exit franchisee allowed to disclose Trade Secrets?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Franchisee agrees that Franchisee shall hold all Trade Secrets in strictest confidence, shall not use or disclose Trade Secrets at any time (except in the performance of this Agreement) until such time as the information ceases to be a Trade Secret through no fault of Franchisee, shall diligently protect any and all Trade Secrets against loss by inadvertent or unauthorized disclosure, and shall comply with guidelines established by Company for the purpose of protecting such information.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, franchisees are generally prohibited from disclosing trade secrets. However, there are specific exceptions. An Exit franchisee can disclose trade secrets if the information (a) is or becomes generally available to the public through no fault of their own, (b) was already in their possession without any restrictions prior to receiving it from Exit, (c) was rightfully disclosed to them by a third party without restrictions, or (d) is required to be disclosed by a court order.
Beyond these exceptions, the franchisee must hold all trade secrets in the strictest confidence. They are prohibited from using or disclosing trade secrets at any time, except when performing their obligations under the Franchise Agreement. This obligation continues until the information is no longer considered a trade secret through no fault of the franchisee.
To protect these trade secrets, Exit franchisees must diligently protect all trade secrets against loss through inadvertent or unauthorized disclosure. They must also comply with any guidelines established by Exit for protecting this information. This highlights the importance of understanding what Exit considers a trade secret and implementing appropriate safeguards to prevent unauthorized disclosure, as any breach could have legal and financial repercussions.