Thank you for your question.
My understanding of your situation is that you entered into a settlement agreement
with the franchisor regarding the settlement of your non-payment of royalties and the franchisor's potential violation of the exclusive territory clause. In essence, the settlement agreement provided you with a payment in return for the mutual release of the claims. It also included a confidentiality
Sometime later, the franchisee which was in your territory contacted you and asked you if there was a breach of the exclusive territory clause in the franchise agreement regarding the distance between the two locations. You did not deny that there was a breach and instructed the franchisee to contact the franchisor about the issue. After that, the franchisee contacted the franchisor and told the franchisor that you said there was a distance breach.
You are now concerned that you are going to be sued under the settlement agreement's confidentiality provision.
My initial impression is that there is not a breach. The franchisee made a fraudulent misrepresentation about where he got the information regarding the distance breach. Since you did not say anything, there is no breach of confidentiality. Generally, the confidentiality terms only go to the terms of the settlement, not to the fact that there was an underlying disagreement.
Can you type in the exact language of the confidentiality provision so that I can provide you with further analysis?