How does Hck Hot Chicken define 'Trade Secrets' in the context of the franchise agreement?
Hck_Hot_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisor may disclose certain of its Trade Secrets to Restricted Persons in the HCK Hot Chicken Brand Standards Manual, bulletins, supplements, confidential correspondence, or other confidential communications, and through the Franchisor's training program and other guidance and management assistance, and in performing Franchisor's other obligations and exercising Franchisor's rights under this Agreement. "Trade Secrets" shall not include information which: (a) has entered the public domain or was known to Franchisee prior to Franchisor's disclosure of such information to Franchisee, other than by the breach of an obligation of confidentiality owed (by anyone) to Franchisor or its Affiliates; (b) becomes known to the Restricted Persons from a source other than Franchisor or its Affiliates and other than by the breach of an obligation of confidentiality owed (by anyone) to Franchisor or its Affiliates; or (c) was independently developed by Franchisee without the use or benefit of any of the Franchisor's Trade Secrets.
The burden of proving the applicability of the foregoing will reside with Franchisee.
- 12.2.2 Each Restricted Person shall acquire no interest in the Trade Secrets other than the right to use them in developing and operating the Franchised Restaurant during the Term of this Agreement.
A Restricted Person's duplication or use of the Trade Secrets in any other endeavor or business shall constitute an unfair method of competition.
Each Restricted Person shall: (i) not use the Trade Secrets in any business or other endeavor other than in connection with the Franchised Restaurant; (ii) maintain absolute confidentiality of the Trade Secrets during and after the Term of this Agreement; and (iii) make no unauthorized copy of any portion of the Trade Secrets, including the HCK Hot Chicken Brand Standards Manual, bulletins, supplements, confidential correspondence, or other confidential communications, whether written or oral.
Franchisee shall operate the Restaurant and implement all reasonable procedures prescribed from time to time by Franchisor to prevent unauthorized use and disclosure of the Trade Secrets, including, implementing restrictions and limitations as Franchisor may prescribe on disclosure to employees and use of non-disclosure and noncompetition provisions in employment agreements with employees who may have access to the Trade Secrets.
Promptly upon Franchisor's request, Franchisee shall deliver executed copies of such agreements to Franchisor.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 54)
What This Means (2025 FDD)
According to Hck Hot Chicken's 2025 Franchise Disclosure Document, trade secrets are defined within the context of what is disclosed to franchisees and their restricted persons (employees, etc.). Hck Hot Chicken may disclose trade secrets in the HCK Hot Chicken Brand Standards Manual, bulletins, supplements, confidential correspondence, training programs, and other guidance. These trade secrets are essential for developing and operating the franchised restaurant during the term of the agreement.
However, the definition explicitly excludes certain information. Trade secrets do not include information that has already entered the public domain, was known to the franchisee before disclosure (unless through a breach of confidentiality), becomes known to the franchisee from another source without breaching confidentiality, or was independently developed by the franchisee without using Hck Hot Chicken's trade secrets. The franchisee bears the burden of proving that any of these exclusions apply.
The franchise agreement emphasizes the importance of maintaining the confidentiality of trade secrets. Restricted persons are prohibited from using the trade secrets in any business other than the franchised restaurant and must maintain absolute confidentiality both during and after the term of the agreement. Unauthorized copying of any portion of the trade secrets, including the HCK Hot Chicken Brand Standards Manual, is strictly forbidden. Franchisees are required to implement procedures to prevent unauthorized use and disclosure, including using non-disclosure and non-competition agreements with employees who have access to trade secrets, and providing copies of these agreements to Hck Hot Chicken upon request.
These stipulations are typical in franchise agreements to protect the franchisor's proprietary information and maintain a competitive advantage. Franchisees must understand their obligations to protect these trade secrets, as failure to do so can result in a material breach of the franchise agreement.