Does the non-disclosure covenant in the Fly Fitness agreement survive the termination of the agreement?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
8.1 Confidential Information. Developer acknowledges and accepts that during the term of this Agreement, Developer will have access to Franchisor's trade secrets, including, but not limited to, formulas, recipes, methods, processes, customer lists, vendor partnerships and/or relationships, sales and technical information, financial information, costs,
product prices and names, software tools and applications, website and/or email design, products, services, equipment, technologies and procedures relating to the operation of the Franchised Business; the Manual; methods of advertising and promotion; instructional materials; any other information which Franchisor may or may not specifically designate as "confidential" or "proprietary"; and the components of the System, whether or not such information is protected or protectable by patent, copyright, trade secret or other proprietary rights (collectively referred to herein as the "Confidential Information"). Developer shall not, during the term of this Agreement and thereafter, communicate or divulge to, or use for the benefit of, any other person or entity, and, following the expiration or termination of this Agreement, shall not use for Developer's own benefit, any Confidential Information that may be communicated to Developer or of which Developer may be apprised in connection with the development of Franchised Businesses under the terms of this Agreement. Developer shall not at any time copy, duplicate, record or otherwise reproduce any Confidential Information, in whole or in part, or otherwise make the same available to any person, without Franchisor's prior written consent. The covenant in this Section 8.1 shall survive the expiration, termination or transfer of this Agreement or any interest herein and shall be perpetually binding upon Developer.
Source: Item 23 — RECEIPT (FDD pages 45–182)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, the non-disclosure covenant extends beyond the termination of the franchise agreement. Specifically, the agreement states that the franchisee is exposed to Fly Fitness's trade secrets and confidential information during the term of the agreement. This information includes formulas, recipes, methods, processes, customer lists, vendor partnerships, sales and technical information, financial data, costs, product prices and names, software tools, website design, and other operational details.
The franchisee is obligated to maintain the confidentiality of this information during the agreement's term and even after its expiration or termination. The franchisee cannot communicate, divulge, or use this confidential information for the benefit of any other person or entity, nor can they use it for their own benefit after the agreement ends. This obligation includes not copying, duplicating, recording, or reproducing any confidential information without Fly Fitness's prior written consent.
This covenant remains in effect perpetually, meaning it continues to bind the franchisee even after the agreement is terminated or transferred. This perpetual obligation ensures that Fly Fitness's proprietary information remains protected, preventing former franchisees from using it to compete against the franchise system. This is a standard practice in franchising to protect the brand's competitive advantage and trade secrets.