How Restaurant Confidentiality Agreements Safeguard Businesses: Insights for Global Entrepreneurs

From an economic and global affairs point of view, confidentiality as a general concept and as a contractual term is of great importance to protect businesses. Therefore, the focus here will be on restaurant confidentiality agreements. These agreements prevent employees from disclosing the secrets of the restaurant including its recipe, internal standards, and other secrets that could lead to legal repercussions under franchising laws and techniques.

Restaurant confidentiality agreements also have an impact on the economy in the Arab world since as much as the industry grows, confidentiality agreement becomes a greater issue, and if not properly regulated, can lead to losses for owners and customers alike.

Restaurant confidentiality agreements are most commonly noted in franchises and distribution agreements covering food products and services. Owners of restaurants and/or franchises are no longer the ones who directly serve the public, but instead sell or resell their businesses to preferred clients. This means that quality of the products and services offered have to be insured before the shops, restaurants and/or franchises can be considered “brands” and not just random shops and/or restaurants.

An actual case in Egypt a few years ago is an example of what happens to restaurants and/or franchises when restaurant confidentiality agreements are not in place. In that case, there was a problem with one of the distributors who was in charge of distributing the food products to restaurants around the country. It was discovered that a large quantity of the products were being replaced with cheaper branded ones, and then resold to clients. The restaurant had to go through a lot of legal battles to have the distributor return and repay the cost of the lost food products.

In order for the restaurant confidentiality agreements to be effective, the following should be agreed to between the two parties:

It has become common practice in the hospitality sector that when someone gets hired the employee is made to sign a confidentiality agreement, which is sometimes called a non-compete agreement. And the use of such agreements has become commonplace over time and as much a routine as signing a labour contract or a non-disclosure agreement.

While it is crucial that there be a balance of the economic interests of the restaurant owner, the customers and the country, it’ll be very difficult to change the practice of signing these agreements. As a matter of fact, restaurant confidentiality agreements have become very beneficial for restaurant owners, as the industry grows and if they want to retain a competitive advantage.

For more information on confidentiality agreements, you can visit Wikipedia.