What is the significance of the franchisee acknowledging that the agreement personally obligates them to confidentiality restrictions and covenants for Mrcool?
Mrcool Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee agrees that only through the course of entering into this Agreement is Franchisee being provided with access to the System, Franchisor's training, use of the Licensed Marks and, access to the Operations Manual and Confidential Information. Franchisee agrees that competition by Franchisee, Owners, Spouses and/or Immediate Family Members could jeopardize the entire System and cause irreparable harm to Franchisor and franchisees of MRCOOL Centers. Accordingly, Franchisee and Franchisee's Owners and, Spouses agree to comply with the restrictive covenants set forth in this Article 6 and throughout this Agreement.
Franchisee agrees that Franchisee's failure and/or Franchisee's Owner(s) failure to comply with the restrictive covenants and obligations set forth in this Article 6 will cause irreparable harm to Franchisor and/or other MRCOOL Center franchisees for which there is no adequate remedy at law. Franchisee agrees that any violation of these Article 6 covenants and obligations by either Franchisee and/or any Owner(s) will entitle Franchisor to injunctive relief. Franchisee agrees that Franchisor may apply for such injunctive relief, without bond, but upon due notice, in addition to such further and other relief as may be available at equity or law, and the sole remedy of Franchisee, in the event of the entry of such injunction, will be the dissolution of such injunction, if warranted, upon a hearing duly held (all claims for damages by reason of the wrongful issuance of any such injunction being expressly waived hereby). If a court requires the filing of a bond notwithstanding the preceding sentence, the Franchisee and Franchisor agree that the amount of the bond shall not exceed $1,000.
Franchisee agrees that with regard to the Franchised Business all customer lists and their contents and information represent Confidential Information and constitute an asset of Franchisor whether or not such information was supplied by Franchisor. During the Term of this Agreement and in connection with the development, establishment, marketing, promotion and operation of the Franchised Business, Franchisee shall disclose to Franchisor all of Franchisee's ideas, concepts, methods and products conceived or developed by Franchisee and Franchisee's affiliates, Owners, agents, and employees relating to the development and operation of MRCOOL Centers. Franchisee hereby assigns to Franchisor and Franchisee agrees to procure from Franchisee's Owners, affiliates and employees assignment of any such ideas,
Franchisee agrees that Franchisee will be presumed to have violated the terms of this Agreement and, in particular, the restrictive covenants and obligations set forth in this Article 6 if any member of Franchisee's immediate family or the immediate family of an Owner: (a) engages in any Prohibited Activities during any period of time during which Franchisee is prohibited from engaging in the Prohibited Activities; and/or (b) uses or discloses the Confidential Information and/or Know-How. Franchisee may rebut the foregoing presumption by providing evidence conclusively demonstrating that neither Franchisee nor Franchisee's Owners disclosed the Confidential Information and, did not permit disclosure of the Confidential Information to the family member of Franchisee or Franchisee's Owner. Franchisee agrees that the foregoing covenants, obligations, representations and burden of proof shall also apply to 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.
Source: Item 23 — RECEIPTS (FDD pages 55–263)
What This Means (2025 FDD)
According to Mrcool's 2025 Franchise Disclosure Document, franchisees are personally obligated to uphold confidentiality restrictions and covenants, both during the term of the agreement and after its expiration or termination. This obligation extends not only to the franchisee but also to their owners and spouses, who must sign a Franchise Owner and Spouse Agreement and Guaranty. Furthermore, it applies to the franchisee's directors, officers, employees, and agents if they have access to confidential information and have signed a Confidentiality Agreement. This highlights the importance Mrcool places on protecting its confidential information and know-how.
The franchisee agrees not to use the confidential information or know-how in any business other than the Mrcool Center, maintain its confidentiality, avoid unauthorized copies, take steps to prevent unauthorized use or disclosure, and cease using it upon termination or transfer of the agreement. These restrictions are crucial for maintaining the integrity of the Mrcool system and preventing unfair competition. The agreement emphasizes that any competition from the franchisee, owners, spouses, or immediate family members could harm the entire Mrcool system and cause irreparable damage to Mrcool and its franchisees.
Breaching these restrictive covenants can lead to significant consequences. Mrcool is entitled to seek injunctive relief to prevent further violations, and the franchisee waives any claims for damages resulting from such an injunction. While a court may require a bond for the injunctive relief, the agreement specifies that the bond amount should not exceed $1,000. These measures underscore the seriousness with which Mrcool views the protection of its confidential information and the enforcement of its restrictive covenants, ensuring that franchisees understand their obligations and the potential repercussions of non-compliance.
Moreover, Mrcool considers customer lists and related information as confidential assets. Franchisees must disclose any ideas, concepts, methods, or products related to Mrcool Centers developed by them or their affiliates to Mrcool, assigning the rights to these innovations to Mrcool. This ensures that Mrcool retains control over improvements and innovations within the system. The agreement also includes a presumption that the franchisee has violated the confidentiality terms if an immediate family member engages in prohibited activities or uses confidential information, placing the burden on the franchisee to prove otherwise. This highlights the extensive measures Mrcool takes to safeguard its business interests and maintain a competitive edge.