Can a Gold Star franchisee disclose Confidential Material to an employee?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
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 permitted to disclose Confidential Material to their employees, but only to the extent required for the employee to perform their job duties in accordance with the Franchise Agreement. This means a Gold Star franchisee can share necessary information with employees so they can do their jobs, but the franchisee must ensure the employees understand the confidential nature of the information and agree to protect it.
The Franchise Agreement defines "Confidential Material" as information contained in the Manual, and other information about the Proprietary Products, the System and the Business, including customer and supplier lists. Gold Star considers this information to be proprietary and highly confidential trade secrets. Franchisees must not use any Confidential Material except as necessary to operate the Business according to the Franchise Agreement.
To protect Gold Star's confidential information, franchisees must also obtain an agreement from their employees (referred to as "Related Parties" in the FDD) to keep the Confidential Materials confidential and to only use them as necessary for the operation of the Business. Furthermore, the franchisee is required to promptly inform Gold Star in writing if they become aware of any unauthorized use of Confidential Material by an employee or any other third party.
This obligation to protect confidential information extends beyond the term of the Franchise Agreement. Franchisees are prohibited from contesting Gold Star's rights to the Confidential Material, even after the agreement ends. This underscores the importance of franchisees taking proactive steps to safeguard Confidential Material and ensuring their employees do the same.