What is the definition of 'Confidential Information' in the context of a Red Wagon Club franchise?
Red_Wagon_Club Franchise · 2024 FDDAnswer from 2024 FDD Document
ly responsible for obtaining Franchisee's own professional advice with respect to the adequacy of the terms and provisions of any non-disclosure and non-competition agreement that Franchisee's employees, agents, and independent contractors sign.
Confidential Information does not include information, knowledge, or know-how, which (i) before Franchisor provided it to Franchisee, lawfully came to Franchisee's attention; (ii) before Franchisor disclosed it to Franchisee, had already lawfully become known to Franchisee through publication or communication by others (without violating an obligation to Franchisor or its affiliates); or (iii) after Franchisor disclosed it to Franchisee, lawfully becomes known through publication or communication by others (without violating an obligation to Franchisor or its affiliates). However, if Franchisor includes any matter in Confidential Information, anyone who claims that it is not Confidential Information must prove that one of the exclusions provided in this paragraph is fulfilled.
All ideas, concepts, techniques, or materials relating to an RWC Business, whether or not protectable intellectual property and whether created by or for Franchisee or Franchisee's owners or employees, must be promptly disclosed to Franchisor and will be Franchisor's sole and exclusive property, part of the System, and works made-for-hire for Franchisor. To the extent that any item does not qualify as a "work made-for-hire" for Franchisor, Franchisee hereby assign ownership of that item, and all related rights to that item, to Franchisor and agree to take whatever action (including signing assignment or other
documents) Franchisor requests to evidence Franchisor's ownership or to help Franchisor obtain intellectual property rights in the item.
8. EXCLUSIVE RELATIONSHIP DURING TERM.
8.A. COVENANTS AGAINST COMPETITION.
Franchisee acknowledges that Franchisor has granted Franchisee a Franchise in consideration of and reliance on Franchisee's agreement to deal exclusively with Franchisor. Franchisee therefore agrees that, during the Term, neither Franchisee, any of its owners, its Designated Manager, nor any of Franchisee or its owners' immediate family members will:
- (1) have any direct or indirect ownership (whether of record, beneficially, or otherwise) in a Competitive Business (defined below), wherever located or operating (except that equity ownership of less than three percent (3%) of a Competitive Business whose stock or other forms of ownership interest are publicly traded on a recognized United States stock exchange will not be deemed to violate this subparagraph);
- (2) perform services as a director, officer, manager, employee, consultant, lessor, representative, or agent for a Competitive Business, wherever located or operating;
- (3) divert or attempt to divert any actual or potential business or Member of Franchisee's RWC Business to a Competitive Business;
- (4) engage in any other activity which might injure the goodwill of the Marks and System or would constitute an act of moral turpitude; or
- (5) solicit, interfere, or attempt to interfere with Franchisor's or its affiliates' relationships with any Members, vendors, or consultants.
A "Competitive Business" means (1) any membership-based business that is affiliated with a law firm that provides non-legal services to clients or members (including, but not limited to, training, social events, and seminars);
Source: Item 22 — CONTRACTS (FDD page 47)
What This Means (2024 FDD)
According to the 2024 Red Wagon Club Franchise Disclosure Document, Confidential Information is defined with certain exclusions. It does not include information that the franchisee lawfully possessed before receiving it from Red Wagon Club, information already lawfully known to the franchisee through publication or communication by others without violating any obligations to Red Wagon Club or its affiliates, or information that lawfully becomes known through publication or communication by others after the franchisor disclosed it, again without violating any obligations to Red Wagon Club or its affiliates. The burden of proof falls on anyone claiming that information is not confidential to demonstrate that one of these exclusions applies.
Red Wagon Club also requires that all ideas, concepts, techniques, or materials related to the RWC Business, whether or not they are protectable intellectual property, be promptly disclosed to Red Wagon Club. These items become the sole and exclusive property of Red Wagon Club, considered part of the System, and are treated as works made-for-hire for Red Wagon Club. If any item does not qualify as a work made-for-hire, the franchisee must assign ownership and all related rights to Red Wagon Club and take any action necessary to evidence Red Wagon Club's ownership or help them obtain intellectual property rights.
The franchisee also has specific obligations regarding Confidential Information. They must not use it in any other business or capacity, must keep it absolutely confidential during and after the term of the agreement, and must not make unauthorized copies of any Confidential Information disclosed electronically, virtually, digitally, or in written form. Furthermore, the franchisee must implement reasonable procedures to prevent unauthorized use or disclosure, including restricting disclosure and requiring those with access to sign a confidentiality agreement. Lastly, the franchisee is prohibited from selling, trading, or profiting from the Confidential Information in any way without Red Wagon Club's approval.
Red Wagon Club retains the right to require any employee, agent, or independent contractor hired by the franchisee to execute a non-disclosure and non-competition agreement to protect the Confidential Information. Red Wagon Club can regulate the form of these agreements and act as a third-party beneficiary with independent enforcement rights. However, the enforceability of these agreements may vary by jurisdiction, and the franchisee is responsible for obtaining their own professional advice regarding this matter.