Confidentiality letter for use in a franchising transaction

Confidentiality letter for use in a franchising transaction

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

In developing a franchise system, a franchisor must develop:

  1. a business system;
  2. operating techniques;
  3. procedures, policies and practices; and
  4. confidential and commercially valuable data, materials, precedents and documentation.  

Confidential information can take various forms, and its nature 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 become a franchisee within the franchisor’s system; and
  1. before any confidential information can be disclosed to them as part of due diligence,

it is recommended that as a minimum, a confidentiality letter is signed to protect the franchisor. This prevents the franchisee from disclosing any of the franchisor’s confidential information during the duration of the term of the franchise agreement, and post-termination or expiry of the agreement.

To ensure that the potential franchisee’s employees and advisors do not disclose any of the franchisor’s confidential information that may come into their possession, the confidentiality letter must also be signed by them.

 

This document has been authored for AusDocsOnline.com 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.