Study On The Trade Secret Protection Of Franchise

In practice, franchise operation can copy the successful businessmodel. With the power of franchiser and franchisee, they may createpowerful business network of wealth. Trade secret is a type ofintellectual property right and reflecting the core competitive advantagein the process of franchising. The protection of trade secret is becomingmore and more important, because this is directly related to the franchiseoperation’s survival in the market competition. As in the franchiseprocess, on the one hand, the reason is for controlling the trade secret.On the other hand, the reason is for different legal systems andcharateristics in the frachise system. Therefore, in order to balance therelationship of franchisers and franchisees between the conflict ofinterests and problem of different legal systems and features, thecontract for the protection of trade secrets in the entire franchiseprocess plays a vital role to achieve the purpose of franchising benignbusiness.This thesis studies on the protecting contract of trade secret ascenter based on China’s legislative status quo and jurisprudence, combined with foreign in the franchise trade secret legislation andjurisprudence point of view. It focus on exploring the use of trade secretprotection contract to control of trade secrets among differentfranchisees and prevent the risk of leakage of trade secrets in the stagesof establishing franchise, fulfilling franchise, removing franchise.Besides Introduction and Conclusion, the thesis is divided into fourchapters as follows:The chapter Ⅰ discusses the theoretic basis of franchise and theimportance of protecting trade secret contract, which is divided into twoparts. One hand, to lay a solid foundation of theory, it clears the concept,charateristic and classfication of franchise and analyzes the tradesecret property of franchising resource and license. The other hand, italso clears the importance of contract to protect trade secrets acrossthe stages in franchise, and respectively analyzes the protection of tradesecret contract in three stages of franchise.The chapter Ⅱ to the chapter Ⅳis in chronlogical order. Thefranchise is divided into three stages, which is also the critical of thisthesis.The chapter Ⅱ focuses on the stage of establishing franchise. Firstof all, Initial information disclosure system is so important in the stageof establishing. From China’s legislative status quo, it analyzes fourfactors influence on protecting trade secret,which is the initialinformation disclosure subject, the initial disclosure information of thetime/opportunity, the initial information disclosure of the content andthe initial information disclosure form. Secondly, a comparative analysisof the “cooling-off period”system can bring three elements impact onthe protection of trade secrets from the legislative situation in Chinaand the extra-territorial. Finally, again as the starting point of theabove these factors, it proposes the confidentiality agreement. Meanwhile, it identified the subject of rights, confidential time/opportunity, thescope of confidentiality and increased the special terms.The chapter Ⅲ focuses on the stage of fulfilling franchise. Firstly,it uses the discussion of ways to explore the challenges posed by follow-upinformation disclosure system for the protection of trade secrets.Secondly, it discusses the conflict about trade secret betweenfranchisers and franchisees. Finally, it proposes to use of theconfidentiality terms, non-competition terms and trade secret feedbackterms in the franchise contract to eliminate the impact of these systemsand the conflict of interests for protecting trade secret.The chapter Ⅳ focuses on the stage of removing franchise. Firstly,the ex-franchisees separate from the franchise system, but they alsoretain in writing or in digital form for the carriers of trade secrets.It is easy to produce leakage of trade secrets. Secondly, compared withjoint management in contract type, once the leakage of trade secrets willnot only have a negative impact on the franchisers,but also on the otherfranchisees. Meanwhile, the ex-franchisees may be adept at using thefamiliar trade secrets unfettered pursuit of the benifits. Lastly, inresponse to these problems, it proposes the return, destruction ofagreement and anticompetitive covenant to eliminate the negative impactof trade secret protection.