Can Red Wagon Club require a Designated Manager to execute a non-disclosure agreement?
Red_Wagon_Club Franchise · 2024 FDDAnswer from 2024 FDD Document
If your Operating Principal does not wish to supervise your RWC Business on a full-time basis, you must appoint a manager who has completed the Training Programs to work full-time to supervise the operation of your RWC Business (the "Designated Manager"). We may establish minimum qualifications for any such Designated Manager, which may include completion of training programs, confirmation that they will have no competitive business activities, and/or execution of a non-disclosure agreement or other covenants we require.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISED BUSINESS (FDD page 37)
What This Means (2024 FDD)
According to Red Wagon Club's 2024 Franchise Disclosure Document, if the Operating Principal does not supervise the RWC Business full-time, a Designated Manager must be appointed. Red Wagon Club may establish minimum qualifications for the Designated Manager, including the execution of a non-disclosure agreement.
This means that as a Red Wagon Club franchisee, if you choose to appoint a Designated Manager instead of having your Operating Principal directly supervise the business full-time, Red Wagon Club has the right to require that Designated Manager to sign a non-disclosure agreement. This agreement would likely protect Red Wagon Club's confidential information and trade secrets.
Red Wagon Club also retains the right to regulate the form of the non-disclosure agreement and to be a third-party beneficiary with independent enforcement rights. However, the enforceability of any non-disclosure agreement that Red Wagon Club requires is not guaranteed and depends on the jurisdiction. It is the franchisee's responsibility to seek professional advice regarding the adequacy of the terms and provisions of any non-disclosure agreement.