Key Elements to Include in Your Co-Packer Agreement

In the food industry, co-packer agreements are essential for marketers who rely on third-party manufacturers to produce their products. A well-drafted co-packer agreement ensures that both parties understand their responsibilities and helps mitigate potential risks associated with regulatory compliance, intellectual property, food safety, and commercial operations. Here, we outline the key elements that should be included in your co-packer agreement to protect your interests and maintain product quality.

1. Detailed Product Specifications

The foundation of a strong co-packer agreement is a clear and detailed description of the product. This includes:

• Physical Characteristics: Size, weight, color, texture, and other sensory attributes.
• Nutritional Content: Specific information on calories, fats, proteins, carbohydrates, vitamins, and minerals.
• Packaging Requirements: Type, size, materials, labeling, and any special instructions.
• Quality Standards: Acceptable ranges for pH, salinity, Brix (sugar content), viscosity, and other critical parameters.

These specifications set precise expectations and allow the marketer to reject non-conforming goods.

2. Regulatory Compliance

Ensuring regulatory compliance is crucial in the food industry. Your co-packer agreement should include provisions that:

• Labeling Accuracy: Require the co-packer to adhere to labeling regulations and ensure that the product label accurately reflects the product’s contents.
• Good Manufacturing Practices (GMPs): Obligate the co-packer to follow federal GMPs and other relevant food safety standards.
• Audit Rights: Grant the marketer the right to conduct regular audits of the co-packer’s facilities and processes to verify compliance with regulatory requirements.

3. Intellectual Property Protection

Protecting your recipes and proprietary formulas is vital. Include the following clauses in your agreement:

• Non-Disclosure Agreement (NDA): Ensure that all shared information, including recipes and production processes, is kept confidential.
• Intellectual Property Ownership: Clearly state that all intellectual property, including any modifications or improvements, remains the property of the marketer.
• Termination of Rights: Specify that the co-packer’s rights to use the intellectual property terminate upon the conclusion of the manufacturing relationship.
• Non-Compete and Non-Circumvention: Prevent the co-packer from using your trade secrets to compete directly with your business or circumvent your commercial interests.

4. Food Safety Provisions

Maintaining high food safety standards is essential to protect consumers and your brand. Your agreement should address:

• Safety Protocols: Require the co-packer to adhere to established food safety protocols and maintain detailed documentation.
• Incident Reporting: Obligate the co-packer to report any food safety incidents or deviations from safety standards immediately.
• Recall Procedures: Establish clear procedures for handling product recalls, including the co-packer’s responsibility to provide timely information and support during a recall.

5. Performance and Delivery Metrics

Clear performance metrics help manage commercial risks and ensure timely and accurate fulfillment of orders. Your agreement should include:

• Delivery Schedules: Set specific delivery timelines and penalties for late deliveries.
• Order Accuracy: Outline expectations for order accuracy and completeness, including procedures for addressing incorrect or incomplete shipments.
• Quality Control: Define quality control measures and the process for handling deviations from agreed-upon product specifications.

6. Financial Terms and Liability

Financial terms and liability provisions are critical components of a co-packer agreement. These should cover:

• Pricing and Payment Terms: Clearly state the pricing structure, payment terms, and any conditions for price adjustments.
• Liability for Non-Conforming Goods: Allocate responsibility for non-conforming goods, including procedures for rejection and replacement.
• Insurance Requirements: Specify the types and amounts of insurance the co-packer must carry, such as general liability and product liability insurance.
• Indemnification: Include indemnification clauses to protect the marketer from liabilities arising from the co-packer’s actions or omissions.

Conclusion

A comprehensive co-packer agreement is essential for mitigating risks and ensuring a successful partnership between food marketers and co-packers. By including detailed product specifications, regulatory compliance measures, intellectual property protections, food safety provisions, performance metrics, and clear financial terms, you can safeguard your interests and maintain product quality.

At Juris Law Group, we specialize in drafting robust co-packer agreements tailored to your specific needs. Contact us today for a free consultation and learn how we can help you navigate the complexities of co-packer partnerships.

For more information or assistance with your co-packer agreements, reach out to Juris Law Group, your trusted partner in food law.

Pejman Javaheri, Esq., is the founder of Juris Law Group, P.C., a firm established in 2009 that specializes in Food IP Licensing and related areas of food and beverage law. With a commitment to integrating legal excellence into business strategies, Javaheri leads a firm renowned for its expertise in areas such as Food & Beverage Law, Licensing & Brand Protection, Outside General Counsel, Consumer Products & Manufacturing, Corporate & Business Law, Family Office, and Business Affairs. Pejman Javaheri brings a unique and comprehensive approach to legal services, particularly in the realm of licensing agreements. Under his leadership, the firm has excelled in areas such as Food & Beverage Law, where his team supports a range of clients from agribusinesses to retailers. In Licensing & Brand Protection, Javaheri has led the firm to become a leader in the food and beverage space, expertly handling negotiations, terms sheets, and drafting industry-standard license agreements.

Pejman Javaheri also specializes in Outside General Counsel, providing strategic planning and comprehensive legal advice; Consumer Products & Manufacturing, focusing on compliance and risk management; Corporate & Business Law, offering a streamlined boutique approach; Family Office, delivering personalized counsel; and Business Affairs, where Javaheri's team combines legal acumen with business insight.

His academic foundation in Political Science and Psychology from the University of California, Irvine, combined with a Juris Doctor from UC Hastings College of the Law, set the stage for a career marked by innovation and comprehensive legal solutions.

At Winston & Strawn, LLP, Javaheri refined his skills in corporate, real estate, and finance law. He is celebrated for his role as a strategic business planner and legal expert, earning the title Chief 'Get Sh!t Done' Officer™ for his dynamic, results-oriented approach. His leadership in community involvement is highlighted by his prestigious role on the Los Angeles Trial Lawyers’ Charities (LATLC) Honorary Board of Directors.

Embodying ethics, commitment, professionalism, confidentiality, and creativity, Javaheri's approach is defined by integrity, a client-focused urgency, and a constant drive for innovation. At Juris Law Group, he not only provides legal solutions but also nurtures the growth and success of his clients' businesses and ventures, adapting to their evolving needs.

Food IP licensing offers a unique opportunity for brand expansion and consumer engagement. Juris Law Group’s experience in facilitating diverse licensing agreements, coupled with the growing trend of major brands entering this space, underscores the potential of this sector. If you are considering leveraging your IP in the food and beverage industry, our team at Juris Law Group is equipped to guide you through this journey. Contact our expert food and beverage licensing lawyers today.