Does Hyper Kidz require franchisees, their principals, and employees to maintain absolute secrecy and confidentiality of the Confidential Information?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
You acknowledge and agree that the Confidential Information is confidential to us and a valuable asset of ours, is proprietary, includes our trade secrets, and is disclosed to you solely on the condition that you, your Principals and your employees who have access to it agree, and you do hereby agree, that during and after the term of this Agreement, you, your Principals and such employees:
- (a) will not use the Confidential Information in any other business or capacity;
- (b) will maintain the absolute secrecy and confidentiality of the Confidential Information;
- (c) will not make unauthorized copies of any portion of the Confidential Information disclosed in written or other tangible form;
- (d) will adopt and implement all reasonable procedures prescribed from time to time by us to prevent unauthorized use or disclosure of or access to the Confidential Information; and
- (e) will require all Principals and all employees and Principals who will have access to Confidential Information, including, without limitation, managers and other personnel who attend our training programs, to execute Confidentiality and Non-Competition Agreements in the form attached hereto as Attachment 9. We shall be a third-party beneficiary of such agreements with the independent right to enforce their terms. You shall provide, at our request, executed originals of each such Confidentiality and Non-Competition Agreement. Failure to procure execution of a Confidentiality and Non-Competition Agreement shall be a material breach of this Agreement.
8.4 Use of Confidential Information
Nothing contained herein shall be construed to prohibit you from using the Confidential Information in connection with the operation of a Hyper Kidz Business, provided such operation is pursuant to a valid franchise agreement between you and us.
8.5 Restrictions on Use
Notwithstanding anything to the contrary contained in this Agreement, and provided you shall have obtained our prior written consent, the restrictions on your disclosure and use of the Confidential Information shall not apply to the following: (a) information, methods, procedures, techniques and knowledge which are or become generally known in the business of the offer and sale of Approved Products and Services and Products in the United States, other than through deliberate or inadvertent disclosure by you; and (b) the disclosure of the Confidential Information in judicial or administrative proceedings to the extent that you are legally compelled to disclose such information, provided you have notified us prior to disclosure and shall have used your best efforts to obtain, and shall have afforded us the opportunity to obtain, an appropriate protective order or other assurance satisfactory to us of confidential treatment for the information required to be so disclosed.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to Hyper Kidz's 2024 Franchise Disclosure Document, franchisees, their principals, and employees are required to maintain absolute secrecy and confidentiality of the Confidential Information. Hyper Kidz defines Confidential Information as methods, techniques, specifications, standards, policies, procedures, information, concepts and systems relating to the development, operation, and franchising of Hyper Kidz Businesses; marketing and promotional programs; knowledge of specifications and suppliers for materials, equipment, and fixtures; the terms of the Franchise Agreement; the Operations Manual; and all data relating to the sales and operations of the franchisee's Hyper Kidz Business.
The franchisee agrees to disclose Confidential Information only to their Principals and employees to the extent reasonably necessary for operating the Hyper Kidz Business. Franchisees, their Principals, and employees must not use the Confidential Information in any other business or capacity, make unauthorized copies, or fail to implement reasonable procedures to prevent unauthorized access or disclosure. All Principals and employees with access to Confidential Information must execute Confidentiality and Non-Competition Agreements, with Hyper Kidz as a third-party beneficiary having the right to enforce these agreements. Failure to ensure these agreements are in place constitutes a material breach of the Franchise Agreement.
However, the restrictions on disclosure and use do not apply to information that becomes generally known in the business of offering and selling approved products and services, unless the franchisee deliberately or inadvertently discloses it. Additionally, disclosure of Confidential Information is permitted in judicial or administrative proceedings if legally compelled, provided Hyper Kidz is notified beforehand and given the opportunity to obtain a protective order. Upon termination or expiration of the franchise, the franchisee must immediately cease using any Confidential Information and return all copies of the Operations Manual and other confidential materials.