## Facts

- Joseph Anthony investigated franchise opportunities beginning in 1993 and focused on the bagel industry.
- Anthony and Randall Flinn pursued a Chesapeake Bagel Bakery franchise, received a 1993 Uniform Franchise Offering Circular (UFOC), and reviewed it in detail.
- Relying on the UFOC’s startup-cost estimates, plaintiffs prepared a detailed multi-unit business plan to support financing and store development.
- Plaintiffs shared the business plan with potential investors and with the franchisor; some disclosures were subject to confidentiality agreements, but the plan was circulated to multiple recipients.
- Motor City Bagels, L.L.C. entered franchise/development agreements to open stores in the Detroit area.
- Actual build-out and opening costs allegedly exceeded the UFOC estimates and plaintiffs’ projections; Motor City declined to open additional stores and stopped paying certain franchise fees/royalties.
- Plaintiffs alleged the franchisor improperly disclosed their business plan and asserted a trade-secret misappropriation claim, along with other franchise-related misrepresentation/omission theories.
- Defendants and AFC Enterprises, Inc. moved for summary judgment on various claims and counterclaims; plaintiffs filed a cross-motion for partial summary judgment.

## Issues

1. Whether plaintiffs’ multi-unit business plan qualified as a protectable trade secret.
2. Whether plaintiffs took reasonable measures to maintain the secrecy of the business plan.
3. Whether startup-cost projections in a franchisor’s UFOC can function as actionable representations (including an implied representation of a reasonable basis and no known contrary facts).

## Decision

- The court granted summary judgment for defendants on the trade-secret misappropriation claim, holding the business plan was not a trade secret.
- The court reasoned that the plan largely consisted of franchisor-supplied information and general business assumptions, and it did not provide a protectable competitive advantage.
- The court found plaintiffs’ dissemination of the plan to multiple third parties, with incomplete confidentiality controls, weighed against trade-secret protection.
- On remaining claims and counterclaims, the court granted summary judgment in part and denied it in part, leaving some contractual and damages issues for further proceedings.

## Legal Principles

- Information is not a trade secret if it is readily ascertainable, derived largely from materials available to others, or reflects general business concepts rather than independently developed proprietary content.
- A compilation may fail trade-secret protection when it does not confer a meaningful competitive advantage and could be recreated by others from the same public or commonly available inputs.
- Reasonable efforts to maintain secrecy are required; broad disclosure to investors and other third parties, without consistent confidentiality safeguards, can defeat trade-secret status.
- Cost projections in franchise disclosure materials may imply a representation of present fact: that the franchisor has a reasonable basis for the projection and is unaware of information making it improbable or misleading.

## Conclusion

The court dismissed the franchisee’s trade-secret theory at summary judgment because the business plan largely restated franchisor-provided and generally available information and was not kept sufficiently confidential, while also recognizing that franchisor cost projections may carry implied factual representations relevant to franchise-disclosure and fraud theories.


Motor City Bagels, L.L.C. v. Am. Bagel Co., 50 F. Supp. 2d 460 (D. Md. 1999)