Can I use Hyper Kidz Confidential Information in any business other than my Hyper Kidz franchise?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
rmation 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.
Nothing contained in the Franchise Agreement will be construed to prohibit you from using the Confidential Information in connection with the operation of other Hyper Kidz Businesses under valid Franchise Agreements with us.
If you have obtained our prior written consent, the restrictions on the 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 indoor recreation business within the Designated Territory, other than through deliberate or inadvertent disclosure by you; and (b) the disclosure of the Confidential Information in judicial or administrative proceedings if you are legally compelled to disclose this information, provided you have notified us in writing before disclosure and used your best efforts to obtain, and 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 disclosed.
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 generally prohibited from using the Confidential Information provided by Hyper Kidz in any business other than their franchised Hyper Kidz Business. The FDD emphasizes that this restriction applies both during and after the term of the Franchise Agreement. This is a standard practice in franchising, designed to protect the franchisor's proprietary information and maintain a competitive advantage. Franchisees are only allowed to disclose Confidential Information to their Principals and employees to the extent reasonably necessary to operate the Hyper Kidz Business.
The Franchise Agreement requires franchisees, their Principals, and employees to maintain the absolute confidentiality of the Confidential Information. They are prohibited from making unauthorized copies and must implement procedures to prevent unauthorized use or disclosure. Hyper Kidz also requires all Principals and employees with access to Confidential Information to sign confidentiality and non-competition agreements, reinforcing the commitment to protecting Hyper Kidz's trade secrets.
There are limited exceptions to this restriction. Franchisees can use Confidential Information in connection with operating other Hyper Kidz Businesses under valid Franchise Agreements. Additionally, if Hyper Kidz provides prior written consent, the restrictions do not apply to information that becomes generally known in the indoor recreation business within the Designated Territory, unless the franchisee deliberately or inadvertently disclosed it. Disclosure is also permitted in judicial or administrative proceedings if legally compelled, provided Hyper Kidz is notified in writing beforehand and given the opportunity to obtain a protective order. These exceptions are typical to protect franchisees from undue restrictions while still safeguarding the franchisor's Confidential Information.