What is the consequence if a Mrcool franchisee discloses Know-How to an immediate family member?
Mrcool Franchise · 2025 FDDAnswer from 2025 FDD Document
You acknowledge that if you did disclose the Know-How to an immediate family member and your immediate family member used the Know-How to engage in activities that, for you, qualify as Prohibited Activities as defined above, that we and the System will be irreparably harmed.
You agree that as between you and us that you are in a better position to know if you permitted and/or provide an immediate family member with access to the Know-How.
Therefore, you agree that you will be presumed to have violated the terms of this Agreement if any member of your immediate family (i) engages in any Prohibited Activities during any period of time during which you are prohibited from engaging in the Prohibited Activities or (ii) uses or discloses the Know-How.
However, you may rebut this presumption by providing evidence conclusively demonstrating that you did not disclose the Know-How nor permit disclosure of the Know-How to the family member.
Source: Item 23 — RECEIPTS (FDD pages 55–263)
What This Means (2025 FDD)
According to Mrcool's 2025 Franchise Disclosure Document, if a franchisee's immediate family member uses the Know-How to engage in Prohibited Activities, it is presumed that the franchisee has violated the terms of the Franchise Agreement. Mrcool defines "Immediate Family" as the spouse of a person and any other member of the household of such person, including children.
The franchisee is considered in a better position to know if they permitted an immediate family member access to the Know-How. If an immediate family member engages in Prohibited Activities or uses/discloses Know-How, the franchisee is presumed to have violated the agreement. However, the franchisee can rebut this presumption by providing conclusive evidence that they did not disclose the Know-How or permit its disclosure to the family member.
This clause places a significant burden on Mrcool franchisees to ensure the confidentiality of the Know-How, even within their own families. The franchisee must be prepared to prove they took adequate steps to prevent unauthorized disclosure. This could involve implementing strict confidentiality protocols within the household and documenting those efforts. The agreement also stipulates that the franchisee acknowledges that if they disclose the Know-How to an immediate family member and that family member uses it to engage in Prohibited Activities, Mrcool and the System will be irreparably harmed.