th images menu user export search eye clock list list2 arrow-left untitled twitter facebook googleplus instagram cross photos entrep-logo-svg

How to keep your trade recipes secret

Your secret recipe should never be divulged.
By Reeza Singzon |
How to keep your trade recipes secret

A few weeks ago, an acquaintance offered to teach me the recipe for a popular brand of fast-food fried chicken. He said that a friend of his once did business with that particular restaurant chain and discovered, or was inadvertently given, its famous secret recipe. I marveled that such simple ingredients could produce fried chicken that’s so crunchy on the outside and yet tender and juicy on the inside. More than that, however, I marveled at the utter laxity of that particular restaurant chain in guarding its proprietary recipe.

One would think that the franchise owners would guard that recipe with their very lives, considering that it’s been the key to the restaurant’s success all these years. However, it turns out that by its mere execution of a contract for the supply of ingredients, that famous restaurant chain had signed away its lifeblood. So now, countless families who are related to or are acquainted with that particular person who had done business with that famous chain are enjoying crunchy, juicy fried chicken in exactly the way it is served at that restaurant, but this time in the cozy privacy of their homes.

This obviously represents a huge loss of revenue for the restaurant. Still, contracting with strangers for the supply of raw materials or even of service is an indispensable part of any business. So, if dealing with potential information thieves can’t be helped, how then could you protect yourself as a business owner?

Using an appropriate confidentiality or non-disclosure agreement can help safeguard your trade secrets. But what exactly is a nondisclosure agreement? It is a contract by which the parties agree not to disclose any information covered by their agreement. As such, it creates a confidential relationship between the parties as a means for protecting certain business information or trade secrets.

Non-disclosure agreements are usually executed by two companies doing business with each other. It is considered mutual if both parties are prohibited from disclosing information; usually, however, it is the bigger company that demands confidentiality since it has more to lose.

The best way to maintain your trade secrets is, of course, to never disclose them to anybody. But if it can’t be helped, you need to compartmentalize your suppliers and disclose information strictly on a need-to-know basis. For example, if you’re in the fried chicken business, don’t get all your ingredients from one supplier. Transact with one supplier for chicken, another supplier for cooking oil, and so on, then make sure that they sign iron-clad nondisclosure agreements stipulating that, at the risk of a costly lawsuit and possible jail time, they can never disclose to anybody (whether competitor or not) what products they are supplying to you. If you want to make it even stricter, stipulate that they can’t disclose to anybody that they’re transacting business with you in the first place.

Non-disclosure agreements give you a legal remedy in the event of a breach. Depending on the information disclosed, you may have other legal remedies available to you, like when there’s a violation of your copyright or trademark. In any case, make sure to update your non-disclosure agreements or contracts once in a while so that you’re always ahead of some of your suppliers who might be comparing notes behind your back.

Reeza Singzon is a practicing lawyer connected with the law firm of Camacho & Associates, which can be viewed at www.camacholaw.net. For comments and questions, send an e-mail to reeza.singzon@gmail.com.

ADVERTISEMENT - CONTINUE READING BELOW

Latest Articles

Close