What is Mrcool franchisees prohibited from doing with the Know-How provided to them?
Mrcool Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee agrees that, at all times, both during the Term of this Agreement and, after its expiration or termination, Franchisee: (a) shall not use the Know-How in any business or capacity other than the operation of the Franchised Business pursuant to this Agreement and as instructed by Franchisor; (b) shall maintain the confidentiality of the Know-How at all times; (c) shall not make unauthorized copies of documents containing any Know-How; (d) shall take all reasonable steps that Franchisor requires from time to time to prevent unauthorized use or disclosure of the Know-How; and (e) shall stop using the Know-How immediately upon the expiration, termination or Transfer of this Agreement. Franchisee agrees that the foregoing covenants and obligations shall also apply to: (a) Franchisee's Owners and Spouses and, that Franchisee's Owners and Spouses shall each execute and deliver to Franchisor the Franchise Owner and Spouse Agreement and Guaranty in the form attached to this Agreement as Exhibit 1; and (b) Franchisee's directors, officers, employees and agents where disclosure of the Know-How was necessary for the operations of the Franchised Business and where such director, officer, employee and/or agent previously executed and timely delivered to Franchisor the Confidentiality Agreement in the form attached as Exhibit 2.
Source: Item 23 — RECEIPTS (FDD pages 55–263)
What This Means (2025 FDD)
According to Mrcool's 2025 Franchise Disclosure Document, franchisees face several restrictions regarding the use of the Know-How provided to them. The Know-How encompasses Mrcool's trade secrets and proprietary information related to the development, establishment, marketing, promotion, and operation of a Mrcool Center. This includes methods, techniques, inventory, product and service standards, specifications, and information within the System, Operations Manual, and Confidential Information. These restrictions apply both during the term of the Franchise Agreement and after its expiration or termination.
Specifically, Mrcool franchisees are prohibited from using the Know-How in any business or capacity other than the operation of their franchised business as instructed by Mrcool. They must maintain the confidentiality of the Know-How at all times and are not allowed to make unauthorized copies of documents containing any Know-How. Franchisees are also required to take reasonable steps to prevent unauthorized use or disclosure of the Know-How, as directed by Mrcool. Upon expiration, termination, or transfer of the Franchise Agreement, franchisees must immediately stop using the Know-How.
These restrictions also extend to the franchisee's owners, spouses, directors, officers, employees, and agents, particularly where disclosure of the Know-How was necessary for the franchised business's operations. Owners and spouses must execute a Franchise Owner and Spouse Agreement and Guaranty, while directors, officers, employees, and agents must sign a Confidentiality Agreement. These measures are in place to protect Mrcool's proprietary information and maintain the integrity of the Mrcool system.
These restrictive covenants are typical in franchising, as franchisors need to protect their intellectual property and trade secrets. Prospective Mrcool franchisees should carefully review these restrictions and understand their obligations to maintain confidentiality and limit the use of the Know-How to the operation of their franchised business.