Do confidentiality obligations to The Standardx continue if a Franchise Agreement is not signed?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
You will sign the Confidentiality Agreement while we and you are evaluating whether to start a franchise relationship. You must keep confidential all information concerning development plans for particular sites or markets and information concerning our plans, strategies, operations, processes, and System Standards, including any information in the PIP that we conduct or prepare for your hotel. These obligations continue even if we and you do not sign a Franchise Agreement. You must take reasonable measures to ensure that your employees, agents and advisors comply with these restrictions and are responsible if they fail to do so. You also must promise us that our and your discussions and, if applicable, your signing a Franchise Agreement do not violate any laws, breach any agreements or require any consents.
Source: Item 14 — PATENTS, COPYRIGHTS AND PROPRIETARY INFORMATION (FDD pages 68–71)
What This Means (2025 FDD)
According to The Standardx's 2025 Franchise Disclosure Document, confidentiality obligations continue even if a Franchise Agreement is not signed. As part of evaluating a potential franchise relationship with The Standardx, a prospective franchisee will sign a Confidentiality Agreement. This agreement mandates that the franchisee keeps confidential all information regarding development plans for sites or markets, as well as information concerning The Standardx's plans, strategies, operations, processes, and System Standards. This includes any information in the PIP (presumably a Performance Improvement Plan or similar document) that The Standardx conducts or prepares for the franchisee's hotel.
This obligation to maintain confidentiality extends beyond the period of evaluation and remains in effect even if both parties do not ultimately sign a Franchise Agreement. Furthermore, the franchisee is responsible for ensuring that their employees, agents, and advisors also comply with these confidentiality restrictions. The franchisee is liable if these parties fail to uphold these obligations. The agreement also requires the franchisee to assure The Standardx that discussions and the potential signing of a Franchise Agreement do not violate any laws or breach any existing agreements, nor require any consents from other parties.
This is a fairly standard practice in franchising, as franchisors need to protect their proprietary information during the evaluation phase. Prospective franchisees should carefully review the Confidentiality Agreement to understand the full scope of their obligations and potential liabilities, even if they do not proceed with the franchise.