Contract Terms Alone Do Not Establish Trade Secret Protection

Vol. 17 No. 1


Peter C. Lagarias, Lagarias Law Offices

Trade secret protection ensures that mouths will continue to water with the secret spices of Colonel Harlan Sanders. The guru of Kentucky Fried Chicken carefully guarded his secret blend of eleven herbs and spices, and few would question the propriety of treating such a recipe as a trade secret. But modern franchise agreements often purport to bring much more information under the umbrella of trade secret protection. A not atypical franchise agreement provision might read:

Confidentiality. During and after the term of this Agreement, Franchisee shall not disclose, except to Franchisee’s employees, or use for any purpose other than operating the franchise business, any trade secret, confidential or proprietary aspect of the System including, but not limited to, the contents of the Franchisee Orientation and Training Manual, Operations Manual, training videos, DVDs and other materials or communications, the training program, the Franchisor’s Web Site and other on-line communications, marketing calendars, marketing plans, or other information or know-how distinctive to a franchise outlet. Franchisee is further responsible for ensuring that Franchisee’s employees maintain the same level of confidentiality.

Are such trade secret provisions enforceable? Or are they unenforceable as overreaching by franchisors?

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