Must a Fitstop franchisee's employees maintain the confidentiality of information they receive?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
During the term of the Franchise Agreement, you will receive information which we consider trade secrets and confidential information. You may not, during the term of the Franchise Agreement or any time after that, communicate, divulge, or use for the benefit of any other person, partnership, association, corporation, or limited liability company any of these trade secrets, copyrighted materials, methods and other techniques and know-how concerning the operation of the Franchised Business (the "Confidential Information"). You may divulge such Confidential Information only to your employees who must have access to it in order to fulfil their employment obligations.
You must require your Designated Manager and any personnel having access to any of our Confidential Information to sign our then-current form of Confidentiality and Non-Competition Agreement set forth in our then-current Manuals or form of franchise agreement, where these individuals agree that they will maintain the confidentiality of information they receive in connection with their employment and restrict their right to work for a competitor while they are employed by you. This confidentiality agreement, which will be in a form that we prescribe, will identify us as a third-party beneficiary to the agreement and will give us independent enforcement rights.
Source: Item 14 — PATENTS, COPYRIGHTS, AND PROPRIETARY INFORMATION (FDD pages 38–40)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, a franchisee's employees must maintain the confidentiality of information they receive in connection with their employment. Fitstop considers certain information it provides to franchisees as trade secrets and confidential information. Franchisees can only share this information with employees who need it to fulfill their job duties.
Fitstop requires franchisees to have their Designated Manager and any personnel with access to confidential information sign a Confidentiality and Non-Competition Agreement. This agreement ensures that employees maintain the confidentiality of the information they receive and restricts their ability to work for a competitor while employed by the Fitstop franchisee.
Fitstop is identified as a third-party beneficiary in the confidentiality agreement, giving them independent enforcement rights. This means Fitstop can directly take action against an employee who violates the agreement, even though the employee is employed by the franchisee. This is a common practice in franchising to protect the franchisor's proprietary information and maintain consistency across the franchise system. The FDD also lists examples of confidential information, including systems, processes, procedures, software, databases, logos, manuals, advertising information, and promotional materials.