Know-how in franchising: how to protect trade secrets

Turning your business into a franchise network means sharing knowledge that has previously stayed within the company. Recipes, cost calculations and ways of organising work can give you a significant competitive advantage. Simply labelling them confidential, however, is not enough. Before presenting the details of your model for the first time, establish what genuinely needs protection, who will receive it and how you will document reasonable safeguards.

1. Distinguish know-how from genuinely secret information

Know-how is the practical knowledge needed to replicate the way a business operates. Not all of it qualifies as a trade secret, however. A standard customer greeting that anyone can observe during a visit is difficult to treat in the same way as an undisclosed recipe or a detailed cost calculation model.

Poland has no separate statute comprehensively regulating franchising. A franchise agreement is an unnamed contract — one not specifically defined in legislation — based, among other things, on the principle of freedom of contract under Article 353¹ of the Polish Civil Code. Nor is there a general requirement to register a franchise network or a specific statutory disclosure document required of every franchisor. This does not mean there are no constraints: general legal provisions apply, including those governing contractual liability and unfair competition.

Article 11 of Poland’s Act on Combating Unfair Competition is central to protecting confidential knowledge. Trade secrets may include technical, technological, organisational or other information with economic value. The information must also meet the statutory conditions relating to secrecy and the steps taken, with due diligence, to maintain its confidentiality.

A clause stating that ‘everything is secret’ therefore does not, on its own, establish statutory protection. A contract can impose broader confidentiality obligations, but it does not automatically turn every piece of information into a trade secret.

2. Create an information inventory and set access levels

Start by reviewing the materials used in your existing business. Do not limit this to documents: valuable knowledge may be found in spreadsheets, training recordings, equipment settings or the experience of an outlet manager.

For each resource, record:

• what it contains and why it has economic value;
• whether it is already publicly available or easy to recreate;
• who is responsible for keeping it up to date and sharing it;
• who needs access to carry out their tasks;
• what safeguards are in place and how you can demonstrate their use.

A practical classification might distinguish between public, internal and confidential materials. The first category presents your offering. The second supports day-to-day collaboration. The third requires restricted access and clear rules on use.

For example, the prospective owner of an outlet needs information that allows them to assess operating costs. Not every employee at that outlet, however, needs to know the commercial terms agreed with every supplier. Access rights should reflect responsibilities, rather than simply membership of the franchise network.

3. Match confidentiality arrangements to each stage of the relationship

Plan to share knowledge in stages. At the initial contact stage, explain the business model without handing over detailed recipes or complete calculation tools. Before granting access to sensitive materials, consider entering into a non-disclosure agreement, commonly known as an NDA.

Above all, this agreement should identify the scope of the protected information, the purpose for which it is shared, the permitted recipients and the rules on copying and onward disclosure. It is also worth specifying how incidents should be reported and what should happen to the materials if discussions end without a franchise agreement being signed.

Confidentiality must not be used to conceal business risks. A prospective franchisee should be able to make a properly informed assessment of the proposed relationship and review the documents with a solicitor or financial adviser. Rather than prohibiting consultation, set conditions for sharing materials securely with advisers.

The franchise agreement should then specify the activities for which the franchisee may use the know-how provided. Keep the confidentiality obligation separate from any non-compete clause: these are distinct obligations that require separate assessment. Nor should all information have the same protection period. A recipe may retain its value for years, whereas a draft campaign schedule can quickly become outdated.

4. Check that protection works in day-to-day operations

Signed documents are no substitute for access controls. Use individual accounts rather than a shared password for the entire outlet. Restrict downloads of particularly sensitive files where the nature of the work allows. Label document versions and retain records confirming that materials have been supplied and recipients trained.

Agree rules with the franchisee on access for their staff. The franchisee should understand which confidentiality obligations must be put in place for people using protected materials. It is also worth deciding in advance who will notify head office of staffing changes that require access rights to be revoked, and when.

Run through a simple scenario: an employee leaves, but a copy of a confidential spreadsheet remains in their personal email account. Who establishes the extent of the disclosure? Who preserves evidence and contacts the franchisee? How is further access blocked? The procedure should also account for statutory document retention requirements and backups, rather than promising the immediate deletion of every copy.

Practical takeaway: before sharing know-how with your first franchisee, prepare an inventory of confidential resources, access rules and appropriate contractual provisions. Then test a specific scenario to check whether you can demonstrate who received the knowledge and how it was actually protected.