How Franchising Works

The Rules: Trade Secrets

A business's trade secrets are often vital to its success. It is an understood rule that franchisees will keep trade secrets strictly confidential. This not only protects the franchise, but it also protects the franchisee's individual investment.

Most states have adopted some version of the Uniform Trade Secrets Act, which helps identify the parts of the franchise system that may constitute a trade secret. To see a list of those states that have adopted it, U.S. Trade Secret Protection by State. Proprietary systems and franchise information that doesn't fall under the category of a "trade secret" should be treated as such regardless, because it may still be protected under the restrictive covenants of the franchise agreement.