What are the Itan franchisee's obligations regarding confidential information if the franchisee's employees or owners breach confidentiality?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
studies, supplier information, customer information, franchisee information, investor information, flow charts, inventions, mask works, improvements, discoveries, standards, specifications, formulae, recipes, designs, sketches, drawings, policies, processes, procedures, methodologies and techniques, together with analyses, compilations, studies or other documents that are: (i) designated as confidential; (ii) known by you to be considered confidential by us; and/or (iii) reasonably to be considered confidential due to their nature. Confidential Information does not include information that: (a) is now, or subsequently becomes, generally available to the public (except as a result of a breach of confidentiality obligations by you or your Owners, employees or other constituents); (b) you can demonstrate was rightfully possessed by you or an Owner, without obligation of nondisclosure, before we disclosed the information to you or the Owner; (c) is independently developed by you or an Owner without any use of, or reference to, any Confidential Information; or (d) is rightfully obtained from a third party who has the right to transfer or disclose the information to you or an Owner without breaching a confidentiality covenant imposed on such third party.
- "Confidentiality Agreement" means the Confidentiality Agreement that must be signed by certain of your employees pursuant to §14.5, the current form of which is attached as ATTACHMENT "G".
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, franchisees have specific obligations regarding confidential information, particularly concerning breaches by their owners or employees. The definition of 'Confidential Information' is broad, encompassing Know-How, Business Data, information within the Manual or System, terms of the Franchise Agreement, and various concepts, ideas, trade secrets, financial and marketing strategies, and other sensitive business details. This information is deemed confidential if it is designated as such, known to be considered confidential by Itan, or reasonably considered confidential due to its nature.
However, the definition of confidential information does not include information that becomes publicly available, unless the information became public due to a breach of confidentiality by the franchisee, their owners, employees, or other constituents. This means that if an Itan franchisee's employee discloses confidential information, causing it to become public, the information does not lose its confidential status, and the franchisee remains responsible for the breach. The franchisee is obligated to take steps to prevent unauthorized use or disclosure of confidential information, as well as to ensure that owners and employees cease using such information when they are no longer associated with the franchise.
To further protect confidential information, Itan requires certain employees to sign a Confidentiality Agreement, as outlined in the FDD. This agreement reinforces the employee's duty to maintain confidentiality and avoid unauthorized use or disclosure of sensitive information. The franchisee must ensure compliance with these confidentiality obligations to safeguard Itan's Intellectual Property and maintain the competitive advantage of the franchise system. The franchisee also agrees to take all steps Itan reasonably requires to prevent unauthorized use or disclosure of Confidential Information.