What is the duration of the confidentiality obligation following the termination or expiration of a Face Foundrie franchise agreement?
Face_Foundrie Franchise · 2025 FDDAnswer from 2025 FDD Document
As between Franchisor, on the one hand, and Franchisee and the Restricted Parties, on the other hand, all Confidential Information is the sole and exclusive property of Franchisor.
Franchisee and each Restricted Party agree that the restrictions contained in the preceding sentences in this Section 7.02(b) will remain in effect with respect to Confidential Information for five (5) years following termination or expiration of this Agreement for any reason; provided, however, if the Confidential Information rises to the level of a trade secret under applicable law, then such restriction shall remain in effect until such time as the information does not constitute a trade secret.
Franchisee also agrees that it and all of its Personnel will take appropriate steps to protect Confidential Information from any unauthorized disclosure, copying or use.
At any time upon Franchisor's request, and in any event upon expiration or termination of this Agreement, Franchisee will immediately return any copies of documents where there are materials containing Confidential Information and will take appropriate steps to permanently delete and render unusable any Confidential Information stored electronically.
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2025 FDD)
According to Face Foundrie's 2025 Franchise Disclosure Document, franchisees and restricted parties are bound by confidentiality restrictions for five years after the termination or expiration of the Franchise Agreement. This restriction applies to all confidential information. However, if the confidential information qualifies as a trade secret under applicable law, the restriction remains in effect as long as the information retains its trade secret status.
This means that after a Face Foundrie franchise agreement ends, whether through termination or expiration, the franchisee cannot disclose or use any confidential information learned during the franchise term for five years. This includes operational methods, business practices, and other proprietary information. The franchisee must also return all materials containing confidential information and ensure that any electronically stored confidential information is permanently deleted and unusable.
The extended protection for trade secrets is a standard practice in franchising, as it ensures that highly sensitive information remains protected indefinitely. This clause protects Face Foundrie's competitive advantage by preventing former franchisees from using trade secrets to compete against the brand.
Prospective Face Foundrie franchisees should understand the scope of 'Confidential Information' and 'trade secret' as defined in the Franchise Agreement to fully grasp their obligations post-termination or expiration. They should also be aware that the definition of trade secret can vary by state, potentially leading to different durations of confidentiality obligations depending on the location of the franchise.