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Who's liable in a private-label partnership?

ice cream manufacturing

Question:

I am planning to use a U.S. food manufacturer to make some of their products under my private label. If I choose a known manufacturer, would their certificates/insurance cover me too? 

– Najeeb Saadi, Saadi & Sons, Tripoli, Libya

Answer:

As operators look for more ways to diversify revenue streams, getting into packaged goods via in-store merchandise or licensing can be an appealing option. Because restaurants are not necessarily set up for producing packaged food, especially in large volumes, and the legalities of producing packaged food in restaurants vary by municipality, many operators turn to co-packers (contract packers) to produce products under their label.

Co-packing agreements and liabilities vary, so before embarking on any relationship, be sure your attorney reviews it. Typically, yes, the co-packer will carry insurance and be responsible for the quality and safety of the product being produced on your behalf. That said, even if you are comfortable with the details of the agreement, by lending your name to the product and selling it, you also assume responsibility and open up some vulnerabilities, both legally and to your reputation. Be sure to consult with your attorney and insurance provider to make sure you are well protected and be careful about selecting the co-packer. Ask for references, product samples, and success stories to be sure you are comfortable attaching your name to that product.

More on working with co-packers here and here

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