When is the receiving party NOT responsible for a breach of the confidentiality agreement by a Representative, according to The Standardx's FDD?

According to The Standardx's 2025 Franchise Disclosure Document, a receiving party is generally liable for breaches of the confidentiality agreement by its Representatives. Representatives are defined as affiliates, related companies, partners, employees, directors, officers, legal counsel, accountants, prospective lenders, consultants, advisors, principals, and existing investors who have a need to know confidential information. The receiving party must inform these Representatives of their obligation to maintain confidentiality.

However, The Standardx specifies an exception to this liability. The receiving party will not be held responsible for a breach of the confidentiality agreement by a Representative if that Representative has independently executed a separate confidentiality agreement directly with the disclosing party regarding the transaction in question.

This provision protects the receiving party from liability when the disclosing party has directly secured a confidentiality commitment from the receiving party's Representatives. It also incentivizes the disclosing party to directly engage with the receiving party's Representatives to ensure confidentiality is maintained, as this action would absolve the receiving party of responsibility for breaches by those Representatives.