Can a franchisee use The Standardx's Confidential Information in any other business?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
Confidential Information is proprietary and includes our and our affiliate's trade secrets. You (a) must not use (or allow your affiliates to use) Confidential Information in any other business or capacity; (b) must keep confidential each item that is a part of Confidential Information, both during and after the Franchise Agreement's term (afterward for as long as the item is not generally known in the hotel industry); (c) must not make unauthorized copies of any Confidential Information disclosed via electronic medium or in written or other tangible form; and (d) must adopt and implement reasonable procedures that we periodically specify to prevent unauthorized use or disclosure of Confidential Information.
Confidential Information does not include information, knowledge, or know-how that you can demonstrate lawfully came to your attention before we or our affiliate provided it to you or your affiliate directly or indirectly; that, at the time we or our affiliate disclosed it to you, already had lawfully become generally known in the hotel industry through publication or communication by others (without violating an obligation to us or our affiliate); or that, after we or our affiliate disclose it to you, lawfully becomes generally known in the hotel industry through publication or communication by others (without violating an obligation to us or our affiliate). However, if we include any matter in Confidential Information, anyone who claims that it is not Confidential Information must prove that one of these exclusions is satisfied.
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, franchisees are explicitly prohibited from using Confidential Information in any business other than their The Standardx franchise. The FDD states that franchisees "must not use (or allow your affiliates to use) Confidential Information in any other business or capacity." This restriction applies both during the term of the Franchise Agreement and even after its termination, as long as the information remains confidential and not generally known in the hotel industry.
The definition of "Confidential Information" is broad, encompassing trade secrets and various aspects of The Standardx's operations, including site selection criteria, hotel design, training materials, marketing techniques, guest information, technology systems, and financial performance data. This extensive definition means franchisees must be extremely careful to avoid using any knowledge gained from The Standardx in other ventures, even inadvertently.
There are limited exceptions. Franchisees can use information that they can prove they lawfully possessed before their involvement with The Standardx, or information that was already publicly known in the hotel industry. However, the burden of proof falls on the franchisee to demonstrate that these exclusions apply. Additionally, franchisees may use guest information generated at their hotel after the franchise agreement expires, provided they comply with The Standardx's data policies.
This restriction is a standard practice in franchising, designed to protect the franchisor's proprietary information and maintain a competitive advantage. Prospective The Standardx franchisees should carefully review the definition of Confidential Information and understand the limitations on its use, both during and after the franchise agreement, to avoid potential legal issues.