Confidentiality clause

What it means

Franchise systems run on proprietary know-how: operations manuals, recipes, pricing, supplier terms and customer data. A confidentiality clause obliges the franchisee (and often their staff) to protect that information and not use it outside the franchise.

These obligations usually survive the end of the agreement, meaning you cannot take the system's secrets into a competing business afterwards, an important interaction with restraint-of-trade clauses.

In practice

Expect and accept a reasonable confidentiality clause, but understand its scope and how long it lasts after you exit. Read it alongside any restraint of trade to see what you can and cannot do post-franchise.

A real example

On exiting, a former franchisee is reminded by the confidentiality clause that she cannot use the franchisor's supplier list or recipes in a new independent venture, even though her restraint of trade has a limited duration.

Confidentiality clause, FAQs