The franchise agreement includes obligations that fall under the charge of the franchiser as much as the franchisee. One of the most important of these obligations is the transmission of “Know-how?” by the franchisor to the franchisee, the default risk being cancellation of the contract. But what about when the franchisee discloses the information, which is by nature secret? PICOVSHI lawyers leaves you with a few answers in the following lines.
“Know how”: Definition and Characteristics
The European Community (EC) specific exemption for franchise agreements dated November 30 1988 n°4087/88 defined “know-how” in franchise agreements as, “An group of information not patented (certified), resulting from the experience of and tested by the franchisor himself, which is secret, substantial, and identifiable.
Many conditions should therefore be in place for someone to be in the presence of “Know-how” and the franchisor should insure that he fulfills every obligation during transfer:
- It must be transferable
- It must be secret
- It must not be patented
- It must have a marketable valuable
Therefore “Know How” should come from the fruits of research, of hard work, and from investments by the franchisor, giving the “know how” its secret nature. The community agreement of the general exemption of vertical agreements of December 22 1999 defines the term “substantial” as signifying that, “‘know-how’ should include essential information for its purchase and the use, the sale and the resale of contractual goods and services.” On December 22 1999 the EC specified that, “’secret’ signifies that the ‘know-how’ in a group or in the configuration and assemblage of its components, it is not generally known or easily accessible.”
The “know-how” should also be identifiable. Generally being long and complex, it is not explicit within the franchise contract, but in an instruction manual that the franchisor transfers to the franchisee from the day of signing the contract until their collaboration finishes.
The “Know-How”: Protecting and defending it
As franchisor, it is recommended to protect one’s own “know-how.” Various solutions are available to you.
To start with, one can consider protecting oneself with a “Soleau envelope” (envelope Soleau) that consists of self- constituting proof of ownership of one’s creation by giving it a date of creation. This step is put into effect by the “l’INPI” or the Institut National de la Propiété Intellectuel (National Institute of Intellectual Property).
Besides this, with the conclusion of the franchise contract, it is advised to call upon a lawyer knowledgeable in franchise law so that one can legally secure one’s “know-how” through the enactment of privacy clauses of confidentiality or secrecy or of non-concurrence.
It is useful also to insert a mention watching over whichever of the relative documents of “know-how” should be returned at the end of the contract.
If, despite these intense protective measures, the franchisee divulges your “know-how,” it is possible to engage one’s civil responsibility by demonstrating a fault, an injury, and a causal link.
The faults can consist of many acts: using abusive “know-how,” industrial espionage, illegitimate access… Only a lawyer, well versed in all of the running parts of franchise law will be able to build the best strategy to defend your interests. Generally, in civil law, it will be a question of unfair competition. In cases of corruption, breaches of trust, or divulgence of trade secrets it is often more related to criminal business law.
PICOVSHI lawyers are lawyers available to you, overseeing all of the relevant aspects of criminal business law to competition law to civil laws and responsibility.