Key contract considerations for app development
Quick service restaurants and food-to-go businesses require, by their nature, easy accessibility and fast service to ensure they stand out in a crowded market. Harry Partridge of law firm Cripps takes you through the key contract points when looking to develop an app for your food business.
Apps (mobile software applications) are versatile tools that can help with customer accessibility ( to your menus or ordering), build brand loyalty, increase spend, and make better use of customer data. They are becoming increasing popular with even smaller independent cafes, restaurants and take-aways, but when starting costs for even a basic app can be between £5,000 and £15,000, and with higher-end functionality potentially exceeding £50,000, it’s important you get what you need.
IP ownership and protection
The main IP (intellectual property) in the app will be copyright in the source code. As the app developer will likely use source code it has already used, or might in the future use, for other clients (commonly called “background IP”) you will need your contract to contain a licence to permit you to use this. However, for the bespoke elements being developed just for you, it is more likely (although not strictly necessary if the licence terms are appropriate) that the developer will agree to transfer (assign) ownership of this IP (the “foreground IP”) to you.
The app development contract should also contain warranty and indemnity protection for you against any third party claiming that the app infringes its IP (ie that it already owns the IP and you don’t have the right to use it in your app).
Careful drafting is needed to define at which point the app will be “accepted” (when the client confirms to the developer it considers the app complete and ready to go live). Acceptance is commonly a trigger for payment of the last (and often largest) proportion of the developer’s fee and after acceptance you may lose a right to reject the app and/or claim compensation for any problems.
Consider whether you will need ongoing maintenance and other services like search engine optimisation, branding and advice on advertising and usability, or future additions such as personalised rewards or ingredients and allergy information.
Security standards, functionality and compliance
Ensure your contract sets out detailed requirements for your app in relation to security (data protection), functionality (for example will you want to allow user-generated content) and compliance with the terms of your chosen “app store”. This last point is crucial as a non-compliant app may be removed from an app store. Consider also if you will want to be able to tie in to social media sites- often popular with out of home food businesses, but not without its own issues.
Ensure your key requirements are listed as warranties in your contract, or you risk being unable to rely on them, especially if your contract contains an “entire agreement” clause.
Do your research: get the choice of developer right and follow that with a tight contract. While it is not possible to predict every potential legal issue that may arise with an app development project, the most common pitfalls can easily be avoided.
This article first appeared in Out of Home magazine.