To what extent can I disclose Hyper Kidz Confidential Information to my Principals and employees?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
Under the Franchise Agreement we will disclose to you, during training and in guidance and assistance furnished to you, parts of the Confidential Information that you need for the development and operation of a Hyper Kidz Business. You may learn or otherwise obtain from us additional Confidential Information during the term of your Franchise Agreement. You must agree to disclose the Confidential Information to your Principals and employees only to the extent reasonably necessary to operate your Franchised Business.
You and your Principals must acknowledge and agree that the Confidential Information is confidential to and a valuable asset of us and our affiliates, is proprietary, includes trade secrets of us and our affiliates and is disclosed to you on the condition that you, your Principals and your employees who have access to the Confidential Information agree that during and after the term of the agreement you: (1) will not use the Confidential Information in any other business or capacity; (2) will maintain the absolute confidentiality of the Confidential Information; (3) will not make unauthorized copies of any portion of the Confidential Information disclosed in written or other tangible form; (4) will adopt and implement all reasonable procedures we prescribe to prevent unauthorized use or disclosure of the Confidential Information; and (5) will require all Principals and all employees who have access to the Confidential Information to sign confidentiality and non-competition agreements in the form we prescribe and provide us, at our request, with signed copies of each agreement. We will be a third-party beneficiary of these agreements with the independent right to enforce their terms.
Source: Item 14 — PATENTS, COPYRIGHTS AND PROPRIETARY INFORMATION (FDD pages 38–40)
What This Means (2024 FDD)
According to Hyper Kidz's 2024 Franchise Disclosure Document, franchisees are permitted to disclose Confidential Information to their Principals and employees, but only to the extent reasonably necessary to operate the Franchised Business. This means that franchisees must exercise discretion and judgment in determining who needs access to what information to perform their duties effectively.
Hyper Kidz requires that both the franchisee and their Principals acknowledge that the Confidential Information is a valuable asset and trade secret. They must agree to maintain its absolute confidentiality, refrain from using it in any other business, and prevent unauthorized copies. Franchisees must implement reasonable procedures to prevent unauthorized use or disclosure, as prescribed by Hyper Kidz.
Furthermore, Hyper Kidz mandates that all Principals and employees who have access to Confidential Information sign confidentiality and non-competition agreements in a form prescribed by Hyper Kidz. The franchisee must provide Hyper Kidz with signed copies of these agreements upon request, and Hyper Kidz is a third-party beneficiary with the right to enforce these agreements. This ensures that Hyper Kidz has direct recourse against individuals who violate the confidentiality provisions, providing an additional layer of protection for their proprietary information.
These measures are typical in franchising to protect the franchisor's business methods and trade secrets. A prospective Hyper Kidz franchisee should carefully review the form of the confidentiality and non-competition agreements to understand the scope of these obligations for their Principals and employees.