Change Order Template Review: What To Review Before Signing

Running a restaurant or cafe in the US involves more than great food and customer service. Before you start working with clients, it is essential to review and understand the contracts that govern your business relationships. These agreements help protect your interests, clarify expectations, and ensure you comply with federal and state laws. This guide covers the main contracts restaurants and cafes should review before working with clients, with practical examples, checklists, and common pitfalls to avoid.

Why Contracts Are Critical For Restaurants And Cafes

Contracts are the backbone of your business operations. For restaurants and cafes, clear and thorough contracts can:

• Define exactly what goods or services will be provided and on what terms
• Clarify payment amounts, timing, and methods
• Allocate risk and responsibility between parties
• Help you comply with health, safety, employment, and privacy laws
• Reduce the risk of disputes, late payments, or liability claims

For example, a poorly drafted supplier contract could leave you with spoiled produce and no recourse, or a vague catering agreement could result in last-minute cancellations without compensation. Written contracts also support compliance with agencies like the US Food and Drug Administration (FDA), the US Department of Labor, and your state health department.

While some oral agreements may be enforceable, written contracts are far easier to prove and enforce. Many state and local health regulations require written records for certain transactions, especially those involving food sources or alcohol sales.

Supplier Agreements: What To Review And Common Mistakes

Most restaurants and cafes rely on multiple suppliers for food, beverages, packaging, equipment, and cleaning products. A supplier agreement sets out the terms for these purchases. Key points to review include:

• Quality and Safety Standards: Specify compliance with FDA, USDA, and state health codes. For example, if you buy eggs or dairy, your supplier should meet FSMA requirements. In California, suppliers must also comply with the state's stricter food safety laws.
• Delivery Schedules and Acceptance: Set clear delivery timelines, days and times, and procedures for rejecting spoiled or late goods. Include a checklist for what to inspect on delivery (temperature, expiration dates, packaging).
• Pricing and Payment Terms: Confirm whether prices are fixed, subject to market changes, or include volume discounts. Spell out payment deadlines and penalties for late payment. In some states, prompt payment laws apply to food suppliers.
• Product Recalls and Liability: Address who is responsible if a product is recalled or causes illness. Federal law may require you to track sources of certain foods for traceability.
• Termination and Breach: Allow you to end the agreement if the supplier fails to meet standards or breaches the contract. Include notice periods and procedures for resolving disputes.

Example: A cafe sources milk from a regional dairy. The supplier agreement should state that milk must be delivered at or below 40°F, meet all state and federal pasteurization standards, and be replaced at no cost if found spoiled upon delivery. If the supplier fails to deliver on time three times in a month, the cafe may terminate the agreement with written notice.

Common Mistake: Not specifying what happens if a supplier delivers spoiled or unsafe goods. This can leave you liable for serving unsafe food or unable to recover your costs.

Checklist:

• Does the contract reference relevant FDA or state food safety standards?
• Are delivery days, times, and acceptance procedures clear?
• Are prices, payment terms, and penalties spelled out?
• Is there a process for handling recalls or unsafe goods?
• Are termination rights and notice periods included?

Catering And Event Contracts: Details project

If your restaurant or cafe offers catering or hosts private events, you need a contract for each client. These contracts should cover:

• Menu and Service Details: List exactly what food and beverages will be provided, including dietary restrictions and substitutions. In some states, you may need to disclose allergens or provide calorie counts for catered events.
• Guest Numbers and Changes: Set deadlines for final guest counts and how changes affect pricing. Specify what happens if fewer guests attend than expected.
• Payment Schedules and Deposits: Require deposits to secure the date and specify when final payment is due. Include cancellation fees for last-minute changes.
• Permits and Insurance: Clarify who is responsible for event permits (such as alcohol licenses) and insurance coverage. In Texas, for example, a separate permit is needed to serve alcohol off-site.
• Health and Safety: Reference compliance with local health department regulations and any special COVID-19 protocols.
• Force Majeure: Address what happens if the event is canceled due to weather, government orders, or other events outside your control.

Example: A restaurant catering a corporate lunch should have a contract that details the menu, delivery time, setup and cleanup responsibilities, alcohol service rules, and what happens if the client cancels less than 48 hours before the event.

Common Mistake: Not specifying cancellation policies or deadlines for final guest counts, which can lead to wasted food and lost revenue.

Checklist:

• Is the menu and service description detailed and clear?
• Are deadlines for guest counts and changes included?
• Are deposits, payment schedules, and cancellation fees spelled out?
• Does the contract address permits, insurance, and health rules?
• Is there a force majeure clause for unexpected events?

Employment And Contractor Agreements: Federal And State Law Caveats

Restaurants and cafes often hire a mix of employees (servers, cooks, managers) and independent contractors (musicians, cleaning crews, marketing consultants). Each group requires different contracts and legal considerations.

• Employment Agreements: Should cover wages (including minimum wage and overtime as set by the Fair Labor Standards Act), tips, benefits, work hours, and grounds for termination. Some states (like California, New York, and Illinois) have higher minimum wages or stricter overtime rules than federal law. Tip pooling and tip credit rules also vary by state.
• Contractor Agreements: For non-employees, clarify the scope of work, payment terms, intellectual property (for example, if a contractor designs your menu or website), and liability insurance. State laws (such as California's AB5) may limit who can be classified as an independent contractor.
• Confidentiality and Non-Compete Clauses: Protect your recipes, customer lists, or business strategies. Note that some states restrict non-compete agreements for restaurant workers. For example, Illinois and California generally prohibit non-competes for hourly workers.
• Employee Handbooks and Policies: While not always required, having clear written policies on harassment, scheduling, and workplace safety can help prevent disputes and support compliance with OSHA and state labor boards.

Example: A cafe hires a pastry chef as an employee and a local artist as an independent contractor to paint a mural. The chef should have a contract covering pay, hours, tip sharing, and benefits, while the artist's contract should specify the scope of work, payment, and who owns the finished mural.

Common Mistake: Misclassifying workers as contractors when they should be employees. This can lead to fines, back wages, and other penalties from state labor agencies.

Checklist:

• Does the agreement comply with federal and state wage laws?
• Are tip, overtime, and break policies clear and state-specific?
• Is the worker correctly classified as an employee or contractor?
• Are confidentiality and non-compete clauses enforceable in your state?
• Are workplace policies documented and up to date?

Customer Terms And Conditions: Online, In-Person, And Privacy

Customer-facing contracts are often overlooked but can be essential, especially if you:

• Take reservations for large groups or private dining rooms
• Offer online ordering, pickup, or delivery
• Sell gift cards, event tickets, or merchandise

Terms and conditions should address:

• Reservation Policies: Set deposit requirements, cancellation deadlines, and no-show fees. In New York City, for example, restaurants may charge cancellation fees if disclosed in advance.
• Online Orders: Clarify delivery areas, refund policies, and what happens if an order cannot be fulfilled. If you use third-party delivery apps, make sure your terms match their requirements.
• Privacy: If you collect customer information, comply with federal privacy rules (such as the FTC privacy guidelines) and any stricter state laws (like California's CCPA or Colorado's CPA). Disclose how you use, store, and share customer data.
• Allergen Disclosures: Warn customers about common allergens in your menu items, as required by FDA rules. Some states require additional menu labeling or calorie counts.
• Gift Card Rules: Federal law (CARD Act) sets minimum expiration periods, but some states (like Massachusetts) require even longer validity for gift cards.

Example: A restaurant with an online ordering system should have clear terms on its website explaining how orders are processed, when refunds are available, how customer data is protected, and what happens if an order is delayed or canceled.

Common Mistake: Not updating online terms to reflect changes in delivery zones, refund policies, or privacy practices, which can lead to customer disputes or regulatory penalties.

Checklist:

• Are reservation, cancellation, and refund policies clear and visible?
• Do online order terms match your actual practices?
• Is your privacy policy compliant with federal and state law?
• Are allergen and calorie disclosures up to date?
• Do gift card terms meet federal and state rules?

Franchise And Service Agreements: What To Look For

If your restaurant or cafe is part of a franchise, the franchise agreement will set out your rights and obligations. Key issues include:

• Brand Standards: Requirements for menu, decor, uniforms, and marketing. Franchisors may require you to use approved suppliers or follow specific recipes.
• Fees and Royalties: How and when you pay the franchisor. Some states, like California, require franchisors to register and disclose detailed information before you sign.
• Territory: Whether you have exclusive rights in a certain area or if the franchisor can open competing locations nearby.
• Termination and Renewal: What happens if you want to exit the franchise or if the franchisor ends the agreement. State franchise laws may give you additional rights or notice periods.
• Dispute Resolution: How disputes are handled, including mediation, arbitration, or litigation. Some states restrict mandatory arbitration clauses in franchise agreements.

Service agreements are also common for cleaning, pest control, security, or delivery services. These should cover:

• Service standards and schedules
• Liability for damage or loss
• Insurance requirements
• Dispute resolution processes
• Termination rights and notice periods

Example: A cafe using a third-party delivery service should have a contract that clarifies who is responsible if food is delivered late or damaged, how customer complaints are handled, and what insurance is required.

Common Mistake: Not reviewing franchise disclosure documents or failing to negotiate service standards, which can lead to loss of brand reputation or unexpected costs.

Checklist:

• Does the franchise agreement comply with state franchise laws?
• Are brand standards and approved suppliers clearly listed?
• Are fees, royalties, and renewal terms clear?
• Are service standards and liability terms included in service contracts?
• Is there a clear dispute resolution process?

FAQs

Do I need a written contract for every restaurant supplier?

While not always legally required, a written supplier contract is strongly recommended. Written agreements clarify expectations, reduce misunderstandings, and provide evidence if there is a dispute. Some states or local health departments may require written records for certain food sources, especially for high-risk items like seafood or raw milk.

What should be included in a catering contract?

A catering contract should specify the menu, guest count, service times, payment schedule, cancellation terms, and any special requirements (such as dietary restrictions or alcohol service). It should also address liability, insurance, and compliance with local health and safety rules. In some states, you may need to include allergen disclosures or obtain special permits for off-site service.

How do I protect my restaurant's recipes and customer lists?

Confidentiality clauses in employment or contractor agreements can help protect proprietary information such as recipes, business strategies, or customer data. Non-compete clauses may be used in some states, but check local laws as some states (like California and Illinois) limit or prohibit their enforceability for restaurant workers.

Are online order terms legally binding?

Yes, if customers agree to your terms and conditions (for example, by clicking "I agree" or placing an order), those terms are generally enforceable. Make sure your online terms are clear, accessible, and comply with federal and state consumer protection laws. Update them regularly to reflect your current practices.

What are common mistakes restaurants make with contracts?

Common mistakes include using outdated templates, failing to update contracts for state law changes, not specifying payment or cancellation terms, and misclassifying workers as contractors. Another frequent issue is not reviewing franchise or service agreements carefully before signing.

Key Takeaways

• Reviewing contracts before working with clients helps protect your restaurant or cafe and supports compliance with US laws.
• Common contracts include supplier agreements, catering contracts, employment terms, franchise agreements, service agreements, and customer terms and conditions.
• Federal rules set a baseline, but state laws and industry standards can add extra requirements or restrictions.
• Written contracts provide clarity, reduce disputes, and support compliance with regulators like the FDA, Department of Labor, and local health departments.
• Checklists and regular contract reviews can help you avoid common mistakes and keep your business running smoothly.

If you are setting up a new restaurant or cafe, or want to review your existing contracts, our team can help you understand your options. For more information about business contracts, visit our Contracts page or call (888) 449-8437. You can also email team@sprintlaw.com. Where legal services are required, they are delivered by licensed lawyers at trusted US law firms through the Sprintlaw platform.