The stealing of trade secrets is a major national problem that had yet another acknowledgement from the Obama Administration recently about how serious it is. When Vice President Joe Biden mentioned the renewed concern at the Creativity Conference in Washington D.C. earlier this month, it was a long time in coming after the administration said they’d attempt to amend intellectual property theft. In the time since they first addressed the issue as a threat to the U.S. economy, trade secret theft has only worsened and racked up billions of dollars in lost profits.
But some of the above could easily be amended without having to take overly extreme international measures. While the hacking problem from other countries is a whole other beast to tame, sometimes trade secrets can be stolen directly from employees. And in other scenarios, it could be the result of employees working in a franchise.
It makes it complicated with franchises because employees working there frequently move on to create a business of their own. When they’re privy to that franchise’s trade secret, they may take elements of those secrets and willfully (or perhaps inadvertently) use them in their own business later.
This scenario happened recently with a South Dakota pizza company with the owners having previously worked at a Little Caesar’s franchise. The latter famous pizza company has a trade secret behind their famous “Hot-N-Ready” process that allows a specific way to prepare their pizzas. It’s a trade secret still existing if you’ve ever seen the “Hot-N-Ready” brand in Little Caesar’s advertising. However, when the above former franchisees went off to start their own pizza company, Little Caesar’s accused them of stealing their trade secret.
While nobody knows if the theft was blatant or just inadvertent assimilation, you might be surprised that Little Caesar’s came out on the losing end. The reason is because they had no trade secret agreement with their employees. When a company has no trade secret agreement, anyone can get away with stealing the secret without punishment.
It’s something your own business should think about, especially when you have franchises with employees who may move on to start their own business. Creating a trade secret agreement usually gets more attention in companies with long-term employees, and it may explain why Little Caesar’s didn’t bother.
What Should Your Trade Agreement Say?
The key element of trade agreements is that you have your bank of employees work together in an overall company goal. By everyone agreeing collectively to keep secrets for the good of the company, you have the best worlds of legal protection, plus trustworthy employees who don’t mind upholding secrets. Yet, in a franchise, it may have to work slightly differently.
Due to many considering working in franchises to be training ground for their own businesses later, a trade secret agreement there should merely be for your own protection. While you should promote the idea of everyone maintaining secrecy, you’ll always have to retain the possibility someone will lift your trade secrets and attempt to use them in their own company. The good news is that if you prove someone is using your secrets, an agreement will be legal enough where you can gain compensatory damages from the infringing business.
The bigger problem is deciding who sees your trade secrets and who doesn’t. You might trust some employees over others, even if that can sometimes be a wild guessing game with little accuracy. Based on your perceptive radar, storing your trade secrets in the cloud can help set things so only certain employees have access to the details while others don’t.
Even if your trade secret is as simple as a unique pizza preparation method, any trade secret is going to mean money and the potential of being stolen online or by employees. Doing your part to protect it helps reduce headaches from the government in trying to stop a problem that seemingly never seems to find a perfect solution.