Understanding Business Plan Non-Disclosure Agreements (NDA)

Written by Dave Lavinsky

Growthink.com Business Plan Non-Disclosure Agreements

When it comes to starting or expanding a business, creating a comprehensive business plan is crucial. A business plan is a written document that outlines the goals, strategies, financial projections, and other key details of a business venture. However, sharing sensitive business information, such as trade secrets, proprietary methods, or financial data, with potential investors, partners, or employees can pose risks. That’s where a Business Plan Non-Disclosure Agreement (NDA) comes into play.

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This article will explain to you what an NDA is and provide a sample NDA. However, before discussing that, it is important to note that most investors and lenders will not sign an NDA. So,  you’ll need to keep that in mind.

Typically on the cover of a business plan, we’ll include the following:

CONFIDENTIAL 

This document includes confidential and proprietary information of and regarding [Your Company Name].  This document is provided for informational purposes only.  You may not use this document except for informational purposes, and you may not reproduce this document in whole or in part, or divulge any of its contents without the prior written consent of [Company Name]. By accepting this document, you agree to be bound by these restrictions and limitations.

While such a statement is far from 100% legal protection, it may provide dissuade readers from divulging information about your business plan and company.

What is a Business Plan Non-Disclosure Agreement

A Business Plan Non-Disclosure Agreement, also known as a Confidentiality Agreement or NDA, is a legal contract that aims to protect the confidential and proprietary information shared in the plan from being disclosed or used by third parties without authorization. It establishes a legally binding agreement between the parties involved, and it helps to ensure that the sensitive information shared in the business plan remains confidential and is not misused.

The main purpose of a Business Plan NDA is to safeguard the intellectual property and confidential information of a business. This may include, but is not limited to:

  • business strategies
  • financial projections
  • marketing plans
  • customer lists
  • trade secrets
  • proprietary technology
  • other sensitive information that gives a business a competitive advantage 

By signing a Business Plan NDA, the recipient agrees to keep the information confidential and not to disclose, use, or exploit it for any purpose other than the intended business relationship.

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What Key Elements are included in a Business Plan Non-Disclosure Agreement

A well-drafted Business Plan NDA typically includes the following key elements:

Definition of Confidential Information: Clearly specifying what information is considered confidential and protected under the agreement. This may include a broad or specific definition of confidential information, depending on the needs of the parties involved.

Obligations of the Receiving Party: Outlining the responsibilities of the recipient of the confidential information, including the duty to maintain confidentiality, restrictions on disclosure and use, and the requirement to return or destroy the information after the business relationship ends.

Permitted Disclosures: Identifying situations where the recipient may be allowed to disclose the confidential information, such as to legal or financial advisors, or as required by law.

Term and Termination: Establishing the duration of the NDA and specifying the conditions under which it can be terminated, such as by mutual agreement or by breach of the agreement.

Remedies for Breach: Outlining the consequences of breaching the NDA, such as damages, injunctive relief, or other remedies available under the law.

Governing Law and Jurisdiction: Specifying the applicable law and jurisdiction that will govern any disputes arising from the NDA.

 

Sample Business Plan Non-Disclosure Agreement:

Below is a sample business plan non-disclosure agreement (NDA). Since we are not lawyers, we recommend that have a lawyer review any NDAs you plan on using.

[Your Company Name]

[Recipient Name]

This Non-Disclosure Agreement (the “Agreement”) is made and entered into as of [Date] by and between Your Company Name (“Disclosing Party”) and Recipient Name (“Receiving Party”).

Definition of Confidential Information: The term “Confidential Information” shall mean any and all information disclosed by the Disclosing Party to the Receiving Party, including but not limited to business strategies, financial projections, marketing plans, customer lists, trade secrets, proprietary technology, and any other information that is not publicly available.

Obligations of the Receiving Party: The Receiving Party shall use the Confidential Information solely for the purpose of evaluating the possibility of a business relationship between the parties and shall not disclose or use the Confidential Information for any other purpose without the prior written consent of the Disclosing Party.

Permitted Disclosures: The Receiving Party may disclose the Confidential Information to its employees or advisors on a need-to-know basis, provided that such employees or advisors are bound by similar confidentiality obligations.

Term and Termination: This Agreement shall remain in effect for a period of [insert duration, e.g., 2 years] from the date of execution, unless terminated earlier by mutual written agreement or by breach of this Agreement. Upon termination, the Receiving Party shall promptly return or destroy all Confidential Information and provide written certification of such return or destruction to the Disclosing Party.

Remedies for Breach: In the event of a breach of this Agreement, the Disclosing Party shall be entitled to seek equitable relief, including but not limited to injunctive relief, as well as damages for any losses incurred as a result of the breach.

Governing Law and Jurisdiction: This Agreement shall be governed by and construed in accordance with the laws of [insert applicable jurisdiction such as “California”]. Any disputes arising out of or in connection with this Agreement shall be resolved exclusively by the courts of [insert applicable jurisdiction].

Entire Agreement: This Agreement contains the entire understanding between the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings, whether oral or written, relating to the Confidential Information.

Binding Effect: This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

By signing below, the parties acknowledge and agree to the terms of this Agreement:

[insert name, signature and date lines]