Is a Gold Star franchisee allowed to license the confidential material?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
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constitute a defense to the enforcement by the COMPANY of the foregoing covenants.
12. CONFIDENTIALITY.
- 12.1 Confidential Material. 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 will advise the COMPANY promptly in writing if FRANCHISEE learns of any claims made relating to or unauthorized use of any Confidential Material whether by a Related Party or a third party.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, franchisees are explicitly prohibited from licensing the confidential material associated with the franchise. The FDD states that the franchisee acknowledges Gold Star's ownership of all rights to the System and Confidential Material, recognizing these as trade secrets revealed in confidence.
The agreement emphasizes that no right is given to the franchisee to disclose, duplicate, license, sell, or reveal any Confidential Material to any person. The only exception to this is when disclosure is required to an employee of the franchisee, and only to the extent necessary for their work in accordance with the Franchise Agreement. This ensures that the employee is familiar with the relevant Confidential Material needed for their role.
This restriction is in place to protect Gold Star's proprietary information and maintain the integrity of its brand and operational systems. Franchisees must also agree to keep the Confidential Material secure and, if requested by Gold Star, obtain agreements from related parties to maintain confidentiality and use the materials only for business operations. This prevents unauthorized use or dissemination of sensitive information that could harm Gold Star's competitive advantage.
Furthermore, franchisees are prohibited from contesting Gold Star's rights to the Confidential Material or from licensing others to use it. This obligation extends both during and after the term of the Franchise Agreement, ensuring long-term protection of Gold Star's intellectual property. Franchisees are also required to promptly inform Gold Star in writing if they become aware of any unauthorized use of the Confidential Material, whether by related parties or third parties.