What is the Punch King Fitness franchisee's responsibility regarding the confidentiality of the System?
Punch_King_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
to the contents of the Operations Manual, the terms of the master copy of the Operations manual maintained by Franchisor at Franchisor's home office shall be controlling. Upon Franchisor's request, Franchisee will cooperate in the efficient return of all Operations manuals that have been identified by the Franchisor as obsolete.
CONFIDENTIAL INFORMATION
A.Use of Confidential Information
Franchisee shall not, during the term of this Agreement and thereafter, communicate, divulge, or use for the benefit of any other person, persons, partnership, association, or corporation any confidential information, knowledge, or know-how concerning the Punch King Fitness Method, the System, or the methods of operation hereunder that may be communicated to Franchisee, or of which Franchisee may be apprised, by virtue of Franchisee's business operations under the terms of this Agreement. Franchisee shall divulge such confidential information only to such of its employees as must have access to it in order to operate the Franchised Business as described herein. In connection therewith, Franchisee shall be fully responsible for ensuring that its employees comply with this Section.
B.Use of and Improvements to the Method
In order to assure maximum uniformity of quality and service in all treatments provided by all Punch King Fitness employees and staff, Franchisee agrees to follow the procedures prescribed by Punch King Fitness methods strictly. As Franchisor develops or learns of improvements, enhancements, or innovations in the procedures and techniques embodied in the Punch King Fitness Method, Franchisor will disseminate such information to all franchisees of the system and authorize their use in the Franchised Business. In return and in consideration, therefore, Franchisee agrees that any idea or suggested innovation or variation that may tend to enhance or improve the Punch King Fitness Method that Franchisee develops, discovers, or otherwise becomes aware of during the term of this Agreement shall be submitted to Franchisor for its evaluation for adoption and use, and Franchisee agrees that all proprietary rights to such ideas, innovations, improvements, enhancements, or variations created or acquired by Franchisee or any of its employees shall belong exclusively to Franchisor and may be made available to all Punch King Fitness and Punch King Fitness franchisees and Punch King Fitness licensees.
C. Remedies
Franchisee acknowledges that any failure to comply with this Section will cause Franchisor irreparable injury, and Franchisee consents to the issuance of and agrees to pay all court costs and reasonable attorneys' fees incurred by Franchisor in obtaining, specific performance of, or any injunction against a violation of, the requirements of this Section.
D.Preservation of Confidentiality
Franchisee shall require Franchisee's Principals, directors, officers, and managers, at the time of the commencement of their association with Franchisee, to execute confidentiality agreements, in a form approved by Franchisor, requiring that all information is proprietary or confidential hereunder that may be acquired by or imparted to such persons in connection with their association with Franchisee be held in strict confidence and used solely for the benefit of Franchisee's Franchised Business and Franchisor, at all times during Franchisor's association with Franchisee and thereafter. Such covenants shall include specific identification of Franchisor as a third-party beneficiary of such covenants with the independent right to enforce the same.
ADVERTISING
A.Advertising
Recognizing the value of advertising and the importance of consistency of advertising and promotion to the furtherance of the goodwill and public image of the System, the parties agree that Franchisor shall conduct, determine, maintain, and administer all national and/or regional advertising funds that are or may hereafter be established pursuant to this Section, and shall have sole discretion over the concepts, materials, media, type, nature, scope, frequency, place, form, copy, layout, and content of all national, regional, and local advertising, and accordingly agree as follows:
B.National Advertising Contributions
Franchisee shall make National Advertising Contributions in the amount of 2% of Gross Revenues payable every month to such national advertising fund ("National Advertising Fund") as Franchisor may establish
for advertising for the System.
Source: Item 22 — CONTRACTS (FDD pages 56–215)
What This Means (2024 FDD)
According to Punch King Fitness's 2024 Franchise Disclosure Document, franchisees have several responsibilities regarding the confidentiality of the Punch King Fitness system. Franchisees must not communicate, divulge, or use any confidential information about the Punch King Fitness method or system for the benefit of any other person or entity during and after the term of the Franchise Agreement. They can only share confidential information with employees who need it to operate the franchised business, and the franchisee is responsible for ensuring these employees also comply with confidentiality requirements.
Punch King Fitness franchisees must treat the Operations Manual and all information within it as confidential and proprietary, using reasonable efforts to keep it that way. They are prohibited from copying, duplicating, recording, or making the manual available to any unauthorized person, and these obligations survive the termination or cancellation of the Franchise Agreement. Franchisees must also ensure their copy of the Operations Manual is secure, current, and up to date, with the master copy held by Punch King Fitness controlling in case of disputes. Upon request, franchisees must return obsolete Operations Manuals.
Furthermore, Punch King Fitness requires franchisees to have their principals, directors, officers, and managers sign confidentiality agreements at the start of their association with the franchisee. These agreements must state that all proprietary or confidential information they acquire is held in strict confidence and used only for the benefit of the franchisee's business and Punch King Fitness. Punch King Fitness is specifically identified as a third-party beneficiary of these agreements, giving them the independent right to enforce them. Failure to comply with these confidentiality obligations can cause irreparable injury to Punch King Fitness, and the franchisee may be subject to specific performance or injunctions, and be responsible for court costs and attorney's fees.