Does the confidentiality section of the Hck Hot Chicken franchise agreement replace other confidentiality obligations of the franchisee?
Hck_Hot_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
- 12.3 Confidentiality and Press Releases.
Franchisee shall not disclose the substance of this Agreement to any third party except as necessary to inform lessors from which it is seeking Leases or lessors which are parties to Leases in order to obtain renewals of, or avoid terminations of, such Leases or as necessary to obtain any Permits or other approvals, or to the extent required by the lawful order of any court of competent jurisdiction or federal, state, or local agency having jurisdiction over Franchisee, provided that Franchisee shall give Franchisor prior notice of such disclosure.
Unless disclosure is required by Applicable Law, no public communication, press release or announcement regarding this Agreement, the transactions contemplated hereby or the operation of the Franchised Restaurant or any Crisis Management Event shall be made by Franchisee without the written approval of Franchisor in advance of such press release announcement, or public communication.
12.3.1 Franchisee must follow all reasonable procedures Franchisor prescribes to prevent unauthorized use and disclosure of Franchisor's policies and the contents of Franchisor's HCK Hot Chicken Brand Standards Manual, marketing concepts, and operating methods and techniques (the "Confidential Materials and Practices"), which may include limiting access to confidential information to management employees with a need to know, and requiring such persons to execute non-disclosure agreements.
12.3.2 Notwithstanding the foregoing, the restrictions on the disclosure and use of the Trade Secrets or Confidential Materials and Practices will not apply to disclosure of Trade Secrets or Confidential Materials and Practices: (i) made in confidence to a government official, either directly or indirectly, or to an attorney, solely for the purpose of reporting or investigating a suspected violation of law; (ii) made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal; (iii) made in cases of suit for retaliation based on the reporting of a suspected violation of law, disclosure of Trade Secrets or Confidential Materials and Practices to an attorney and for use of the Trade Secrets or Confidential Materials and Practices in such court proceeding, so long as any document containing the Trade Secrets or Confidential Materials and Practices is filed under seal and Trade Secrets or Confidential Materials and Practices is not otherwise disclosed except pursuant to court order.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 54)
What This Means (2025 FDD)
According to the 2025 Hck Hot Chicken Franchise Disclosure Document, Section 12.3.2 clarifies that the restrictions on disclosing and using trade secrets or confidential materials do not apply in certain situations. These exceptions include disclosures made in confidence to a government official or attorney for reporting or investigating a suspected violation of law, disclosures in a lawsuit if filed under seal, and disclosures in retaliation suits for reporting suspected violations, provided the documents are filed under seal and the information is only disclosed pursuant to a court order.
Furthermore, Section 12.3.1 states that Hck Hot Chicken franchisees must adhere to procedures preventing unauthorized use or disclosure of the franchisor's policies, the HCK Hot Chicken Brand Standards Manual, marketing concepts, and operating methods. These procedures may involve limiting access to confidential information to management employees who need to know and requiring these individuals to sign non-disclosure agreements.
Section 12.3 also specifies that franchisees cannot disclose the substance of the franchise agreement to third parties, except when informing lessors to obtain or renew leases, obtaining permits or approvals, or when required by a court or agency order. In such cases, franchisees must provide prior notice to Hck Hot Chicken. Public communications, press releases, or announcements about the agreement or the operation of the franchised restaurant require written approval from Hck Hot Chicken in advance, unless disclosure is mandated by applicable law. These stipulations suggest that the confidentiality section works in conjunction with, rather than replacing, other confidentiality obligations, as it outlines specific instances where disclosure is permitted or required, and emphasizes the need for franchisees to actively protect confidential information.