Does the co-packer contract transfer when I buy a food brand?

Many small food brands do not own a plant. A co-packer makes the product, and the brand owns the name, the formulas and the customers. If the co-packer stops, the brand stops. So the production contract is one of the first documents a buyer should read, and one of the few where a quiet surprise can end the business.

Assignment and consent clauses

Look for wording on assigning the agreement, on a change of control, and on termination. Whether you need the co-packer’s consent can depend on how the deal is built. If the brand’s company is sold, the contract may stay where it is; if assets are sold, it may need to be assigned. The contract’s own terms decide, so ask your lawyer. Your lawyer sorts out which applies.

Run minimums, costs and terms

Ask what the co-packer requires per production run, how it sets its charges, how notice of changes works, and how long the agreement lasts. Ask whether the seller’s terms with the plant would be offered to a new owner. Ask the co-packer, with the seller’s permission, whether the terms stay as they are.

Tooling, packaging and a backup

Find out who owns the moulds, dies, labels and printed packaging held at the plant, and who owns the ingredient and packaging stock. Get that in writing. Ask whether a second co-packer has ever made the product, or has been briefed, so that you are not tied to one plant if the relationship changes.

• The signed agreement and every amendment.
• A list of what the co-packer holds that belongs to the brand.
• The formulas and specifications, and who holds copies.
• Any quality audits or complaints on file.

Who holds the formulas matters just as much, which this page on getting the recipes covers.