Confidentiality in franchising: what to check before signing

Before buying a franchise in Poland, you may be asked to sign a confidentiality undertaking before you can see the operations manual or details of the business model. This is understandable: sharing know-how is an important part of how franchise networks work. However, protecting that know-how should not prevent you from properly assessing the investment. Check that the document allows you to seek advice on the offer, obtain finance and withdraw from discussions without leaving you subject to unclear obligations.

1. Establish what the law protects and what the agreement adds

Poland has no separate statute comprehensively regulating franchising, nor a specific statutory disclosure document required before every franchise agreement. A franchise agreement is an ‘unnamed contract’ — one not specifically defined by statute — based on the principle of freedom of contract under Article 353¹ of the Polish Civil Code. That does not give the parties an entirely free hand: the terms must comply with the law, the nature of the legal relationship and the principles of social conduct recognised under Polish law.

The Polish Act on Combating Unfair Competition is also relevant to confidentiality. Article 11 protects trade secrets. These are economically valuable items of information that are neither generally known nor readily accessible to people who normally deal with that kind of information, provided the person entitled to protect them has taken steps, with due care, to keep them confidential. Simply labelling material ‘secret’ does not establish that these conditions have been met.

Article 72¹ of the Civil Code also matters: where information is disclosed during negotiations subject to confidentiality, the other party generally may not disclose it, pass it on or use it for its own purposes, unless the parties agree otherwise. The absence of a separate confidentiality agreement therefore does not mean you are free to use the materials you receive as you wish.

An agreement may also define a broader range of protected information. You therefore need to distinguish statutory protection from the obligations you voluntarily accept.

2. Narrow the definition of confidential information

A clause covering ‘all information relating to the network, regardless of its source’ makes it difficult to establish what you can actually use. Ask for the categories of material, the ways it will be shared and the purpose for which you may use it to be specified. During discussions, that purpose should be to assess whether to join the franchise, not solely to operate an outlet later on.

Recipes, operating instructions, non-public commercial terms and organisational methods may reasonably warrant protection. Content on the brand’s public website, or knowledge you already possessed, should be treated differently.

Propose exclusions for information that:

• is publicly available without any breach of your obligations;
• was lawfully known to you before discussions began;
• was lawfully received from an independent third party without a duty of confidentiality;
• was developed independently, without using the franchisor’s materials.

Also agree how confidential information shared verbally will be confirmed. A practical solution is to identify it afterwards in an email or written record. Keep dated versions of your own work: if a dispute arises, they may help demonstrate that it was created earlier or independently.

3. Allow access for advisers and finance providers

Do not sign a document that allows only you to review the offer if you need to consult a lawyer, accountant or bank before deciding. The fact that an adviser is bound by professional confidentiality does not remove the need to check whether your agreement permits you to share materials with them.

Agree a list of permitted recipients or categories of recipient. Specify whether their professional duty of confidentiality is sufficient or whether they must sign an additional undertaking. Disclosure should be limited to what they need: a bank will not always require the full operations manual, and a lawyer does not need credentials that provide access to the network’s systems.

Also check your liability for those people’s actions. A clause making you liable, without limits, for anything any recipient does requires particularly careful assessment.

The document should allow for disclosures required by law, for example at the request of an authorised public body. Any requirement to notify the franchisor should apply only where notification is legally permitted. Confidentiality must not be used to circumvent statutory duties.

Ask about protection for information you provide, too: your budget, financing terms or your own business methods. If information is being exchanged in both directions, consider a mutual confidentiality undertaking.

4. Plan for the end of discussions and ongoing protection

Before signing, establish what happens if you do not buy the franchise. The document should distinguish between returning materials, deleting copies and the continuing prohibition on using protected know-how. Ask about deadlines for returning or deleting materials and how compliance should be confirmed.

Removing every copy completely can be difficult where automatic backups are involved. It is sensible to agree rules for protecting those copies and deleting them through the normal backup cycle. It is also worth allowing for a limited set of records to be retained where needed to meet legal obligations or defend against claims, with those records remaining confidential.

Check how long the undertaking lasts. Do not assume that ending discussions automatically releases you from the duty to protect information, or that expiry of the contractual period always ends statutory trade secret protection. Different types of information may justify different protection periods.

Look out for restrictions disguised as confidentiality clauses, such as bans on running a similar business, contacting suppliers or using your general skills. These restrictions require separate analysis and should not be treated as minor technical additions.

Practical takeaway: before accepting materials, agree what you must protect, whom you may show it to and what you will do when discussions end. Clearly defined confidentiality protects the franchise network’s know-how without preventing an informed decision about buying the franchise.