What actions are considered a breach of the Gold Star franchise agreement regarding trade secrets?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
- 14.4.2 Any provisions of Sections 11 or 12, regarding trade secrets, confidentiality and/or non-competition, are breached;
Information contained in the Manual, and other information about the Proprietary Products, the System and the Business, including customer and supplier lists (the "Confidential Material") are proprietary, highly-confidential trade secrets and FRANCHISEE shall not use any such Confidential Material except as necessary in the operation of the Business in accordance with this Agreement.
FRANCHISEE further acknowledges and agrees that the COMPANY is the owner of all rights in and to the System, and the Confidential Material, and that the System and the Confidential Material constitute trade secrets of the COMPANY which are revealed to FRANCHISEE in confidence, and that no right is given to or acquired by FRANCHISEE to, and FRANCHISEE shall not, disclose, duplicate, license, sell or reveal any of such Confidential Material to any person, other than disclosure to an employee of FRANCHISEE to the extent required by his/her work in accordance with this Agreement to be familiar with relevant Confidential Material.
FRANCHISEE agrees to keep confidential such Confidential Material, and, upon the COMPANY's request, to obtain from each of the Related Parties an agreement to keep the Confidential Materials confidential and not to use the Confidential Materials except as necessary in the operation of the Business.
FRANCHISEE also agrees not to contest or aid in contesting, directly or indirectly, the COMPANY's right, title, ownership or interest in or to, or the validity or enforceability of, any copyrights, Confidential Material or the System, or contest the COMPANY's sole right to register, use or franchise or license others to use any such copyrights, the System or the Confidential Material, during or after the term of this Agreement or any extension or renewal thereof.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to the 2025 Gold Star Franchise Disclosure Document, a franchisee can breach the franchise agreement by violating the sections regarding trade secrets, confidentiality, and non-competition. Specifically, Section 14.4.2 states that any breach of Sections 11 or 12 concerning these topics constitutes a default under the agreement. This means franchisees must be extremely careful to protect Gold Star's confidential information and adhere to any non-compete clauses. Violating these provisions could lead to serious consequences, including termination of the franchise agreement.
Section 12 of the Gold Star FDD further clarifies what constitutes confidential material. This includes information contained in the Manual, details about the Proprietary Products, the System, and the Business, including customer and supplier lists. Gold Star considers these items proprietary and highly confidential trade secrets. Franchisees are only permitted to use this information as necessary for operating their Gold Star business in accordance with the franchise agreement.
The Gold Star franchise agreement explicitly prohibits franchisees from disclosing, duplicating, licensing, selling, or revealing any confidential material to any person, with a limited exception for employees who need the information to perform their work. Franchisees must also obtain agreements from related parties to keep the materials confidential. Furthermore, franchisees agree not to contest Gold Star's rights to its copyrights, confidential material, or the System. These stipulations highlight the importance Gold Star places on protecting its intellectual property and trade secrets, and the serious repercussions for franchisees who fail to do so.