Confidentiality deed for use in a franchising transaction

Confidentiality deed for use in a franchising transaction

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This is a document confidentiality deed for use in a franchising transaction.

Before taking applications from potential franchisees, a franchisor needs to develop:

  1. a business system;
  2. operating techniques;
  3. procedures;
  4. policies; and
  5. practices.

In doing so, the franchisor must complete confidential and commercially valuable data, materials, precedents and documentation. Confidential information can take various forms, and the nature of confidential information will vary from system to system. The circumstances and timing of disclosure will also vary widely.

Before a franchisee can:

    1. progress with their application to join the franchisor’s system; and
  1. receive any confidential information from the franchisor as part of due diligence,

the franchisee should sign a confidentiality deed. Signing this deed prevents the franchisee from disclosing any of the franchisor’s confidential information during the due diligence process and the term of the franchise agreement, as well as post-termination or expiry of the term of the franchise agreement.  

Clause 2(b)(vi) should be completed to include all aspects of confidential information applicable in the particular circumstances of the transaction, in addition to the general provisions already contained in clause 2(b).

This precedent may be used by someone who does not have any prior knowledge of the industry sector to which the franchise pertains, and the reasonable restraints in all the circumstances. It focuses on the essential issues involved in confidentiality documents.

It may be appropriate to add various boilerplate clauses on issues such as force majeure, waiver, governing law, service of notices, reading down and severance, depending on the circumstances.

This document has been authored for LexisNexis by Stephen Giles, Norton Rose Fulbright Australia with introductory notes by Jane Garber-Rosenzweig, Gable Lawyers.

This document is prepared with the assistance of Specialist Editor Stephen Newman, Executive Counsel, Ponte Earle.