Before You Sign a Co-Packing Agreement: Questions to Ask

Whose formula is it, and what can each party use?

Separate the recipe you bring into the relationship from development work the manufacturer may perform. If the co-packer helps adapt a formula for its equipment, ask how the agreement treats those changes and the information needed to make the product elsewhere. Ownership, access, confidentiality, and permission to use information are related but different questions.

It is also worth asking who holds the usable production record. A founder might possess a kitchen recipe while the manufacturer holds the scaled formula and process specifications. The commercial goal should be explicit: what information does the brand expect to retain, and what legitimate manufacturing know-how will the co-packer protect? Do not assume that paying a development invoice answers every ownership question.

Are forecasts becoming purchase commitments?

Discuss minimum run sizes, order lead times, reserved capacity, deposits, and the point at which an order becomes firm. A forecast can help a manufacturer plan, but a brand should understand whether the agreement treats it as an estimate or a binding commitment. The same care belongs in cancellation and rescheduling provisions.

Look beyond the first run. What happens if demand is lower than expected, ingredients arrive late, or a retailer requests an earlier delivery? A useful agreement connects those events to a decision process and financial consequences. It should be possible to explain the consequences in ordinary business language before relying on a dense provision.

Who owns the packaging problem?

Clarify who orders cans, lids, cartons, labels, and specialty ingredients; who approves specifications; and who pays for freight, storage, excess inventory, or obsolete materials. Review any schedules or purchasing terms attached to the agreement, because an appealing manufacturing price can sit alongside a substantial inventory commitment.

Hypothetically, a brand orders a large quantity of printed cans to lower its unit cost, then changes its product name after the first run. The co-packer still has pallets of old packaging. A conversation about ownership, storage charges, disposal, and return freight before signing is more useful than a later disagreement about whose warehouse problem this has become. This is a hypothetical example.

Turn quality expectations into an operating process

“Make a good product” is not enough information to manage a production relationship. Discuss agreed specifications, sampling, release decisions, records, complaint handling, and the process for investigating a questioned batch. Legal review should work with the technical specifications provided by the appropriate production and food-safety professionals, rather than inventing technical standards.

FDA’s preventive-controls framework imposes requirements on covered facilities, with applicability and exceptions depending on the circumstances. A commercial agreement does not replace those obligations. FDA also addresses coordination between brand owners and co-manufacturers in supply-chain guidance. These sources support asking who will provide necessary supplier information and perform assigned activities; they are not a reason to assume every business has identical duties.

Plan communication when something goes wrong. Who is notified, who preserves records, who can stop shipment, and how will costs be evaluated? Recall responsibilities, insurance, indemnity, and liability limits should be considered together. The most reassuring clause is not necessarily the broadest promise; it is one that fits the parties’ actual ability to perform.

Make the ending workable before the beginning

Ask about termination rights, notice, unfinished orders, final payments, remaining materials, and access to information needed for transition. If the product needs specialized equipment or a long qualification period at another facility, those facts belong in the business discussion. An exit right is less useful if exercising it leaves the brand unable to obtain its inventory or essential records.

For review, gather the whole proposed agreement, schedules, specifications, quote, and relevant written commitments. Explain the parts of the deal that matter most to you. CPG Regs’ co-packer/distributor review service provides legal review and redlining of an agreement with a discussion; negotiation is separately scoped. That distinction helps turn review findings into a realistic plan for the next conversation with the manufacturer.