Why is a Non Disclosure Agreement Important for White Labeled Services?

White Label Services are no short of a boon for most businesses. Many agencies rely on white label partners to deliver high-quality services to their clients. This allows them to drive their sales and grow their businesses.

White Labeling allows you to provide services to your clients using the expertise of another company under your own banner. However, when you partner with a White Label service provider, it is important to sign a Non Disclosure Agreement to protect your business.

In this post, we will take a close look at why a Non Disclosure Agreement is important when partnering with a white label service provider.

The Basics of White Label Services

Let us try to understand the basic model of White Labeling with the help of an example.

Consider a scenario where your agency partners with a white label SEO service provider. Both parties agree on a fixed cost per project. Your agency may have to share confidential client information with the white label partner so that they can plan their SEO strategy accordingly. Since you are exposing inside information of your client to a third party, it becomes critical to have a Non Disclosure Agreement (NDA) that protects said information by law.

When is an NDA Needed?

A Non Disclosure Agreement is absolutely necessary when an agency partners with a white label service provider. An NDA protects your client’s information as well as your business by legally binding your white label partner against disclosure.

These are the following scenarios when an NDA is required:

a. Intellectual Property Protection

If you are in a business wherein proprietary information forms the basis of your market, you must protect it under Intellectual Property. Intellectual Property law is a legal conduct to protect your work, copyrighted items, unique ideas, business strategies and more from being plagiarized.

Consider a situation where you provide content marketing services to a client. Your client must allow you to understand their product, its USPs and also their business strategies to ensure that you can create a digital marketing campaign for them. When you pass on this job to your white label partner, your agency will have to share this information with them as well. You can sign an NDA to legally bind them to confidentiality and protect your client’s intellectual property.

Elements covered under Intellectual Property Law include:

  1. The Designs
  2. Confidential information:
    • Business models
    • Plans or prototypes
    • Information about clients or customers
    • Patients’ test results
  3. Proprietary information
  4. Trade secrets
  5. Copyrighted works
  6. Patented Technology mechanisms, etc.

b. Undertaking Small Short Duration Contracts

Signing an NDA is critical when hiring a third-party for their white label services. Sometimes, you may be approached by clients to work on small short duration projects like adding WordPress plug-ins to a site etc. The client will share copyrighted information, like logos, with you for its execution.

If your white label partner works on this project, you will have to provide them with this information. An NDA will ensure that the client’s information is protected by your white label partner. This also means that the white label partner is prohibited from disclosing project-related sensitive information in their portfolio.

c. Product Licensing

If your clients license their products and services to another company, your white label partner may be required to keep the third party’s name confidential as well. Ensure that your agreement mentions this to protect your client’s information.

Main Features of a Non Disclosure Agreement with a White Label Partner

A Non Disclosure Agreement plays a critical role in all industries; however, here we will be addressing the main features specifically for partnering with a White Label service provider. Regardless of what you want to keep confidential and how many parties are involved, here are a few specifics that most NDAs include:

  1. Specific duration for which the NDA shall be valid.
  2. The scope and the nature of the confidential information.
  3. Number of parties involved.
  4. Obligations of each party.

Important Points to Note When Drafting an NDA

  1. The first step is to earmark the legal identities of all the parties involved. Refrain from using short names, acronyms or even the commonly used name of the companies. Stick to the full legal names of each party. Small omissions such as missing out on adding the ‘Limited’ at the end of a company’s name too may render the entire agreement invalid.
  2. Next, define all the elements that you need to keep confidential. If multiple parties are involved, chart out all the common and the specific information that you need for the other parties to keep classified. An NDA is usually aimed at facilitating all the parties involved. So, remember to read well on what is expected from you, as an agency, legally.
  3. Identify if it is a unilateral NDA or a mutual NDA. In a mutual NDA, all parties must maintain confidence over the subjects mentioned. In a unilateral NDA, however, only one party must maintain secrecy, while the other party is free to choose when they want to disclose what part of the subject.
  4. Read the entire document after drafting it thoroughly. Since this is a legally binding document, refrain from ‘assuming’ anything and ensure that the draft is well read and understood. You can even seek the assistance of your in-house legal team or have an advocate or lawyer look over it.
  5. The clauses in your NDA should also address issues that may arise in the event of organizational growth and changes. It is possible that your company or that of your partner’s will evolve over time. Including various possibilities like mergers, takeovers or even expansions in the agreement will prevent any disagreement in future.
  6. If there is an article on residuals clause within the agreement, ensure that you read it carefully. By agreeing to it, your agency confirms that it shall be okay with someone speaking about said information after the NDA is over, but the party will not be at liberty to email, fax, phone or post such information across any platform.
  7. Make sure that the NDA is subject to local jurisdiction. If your digital marketing company is based out of the USA, for example, but your white label partners are in the India, make sure you can address any disagreement locally.

Conclusion

Drawing up an NDA for your business when other parties are involved is of critical significance. As a digital agency, SEO or any service provider, you will be trusted with a lot of information by your clients. To protect your agency’s clients and your own business make sure to conduct sufficient research and seek legal counsel to prevent misunderstandings or problems in the course of services bought.

  • Manish Dudharejia is the Founder & CEO of E2M Solutions, a full service digital agency specialized in Website Design & Development, eCommerce, SEO, Content Marketing, and Copywriting.
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