Private Label Agreements
The Food Law Firm can help draft and negotiate private label agreements from either the perspective of manufacturers or purchasers. Get in touch to find out how. Contact us.
Are you the brand (Marketer) or the manufacturer? The risks run in opposite directions. Manufacturers are protecting a formula and production capacity; brands are protecting margin, supply, and shelf reputation. Read the section that fits your side of the deal — and have us draft for both.
What Are Private Label Agreements?
Private label agreements are a type of manufacturing agreement used to produce many products, including foods, supplements, and cosmetics. In private labeling, a manufacturer agrees to produce its own recipe and formula, and the purchaser-customer then markets it under their own branding and trademarks. It is essential to address issues like proper food and nutrition labeling, food safety, food recall liability, and the intellectual property issues related to product formulation.
Why Use Private Label Agreements?
From the manufacturer’s perspective, private label agreements maximize production potential without the need to build retail markets for the product. A manufacturer can get the product onto more shelves without funding more marketing.
From the Marketer’s perspective (the “Marketer” being the company that buys the products to sell them on the open market), margins on private label goods are better, which gives Marketers more economic bargaining power with suppliers of national brands. Private label agreements give major retailers like Amazon the capability to rapidly expand product offerings with minimal investment in food processing and production.
Neither party realizes the true benefits of private labeling unless they document the manufacturing agreement in writing. A good private label agreement needs to identify and address the major risks of contract manufacturing of a food product. The risks are:
- Maintaining solid control over intellectual property like product formulas.
- Marketing a misbranded product.
- Inadequate manufacturing practices that result in sick customers or product recalls.
- The basic risks inherent in any manufacturing or supply relationship – quality of goods, timing of delivery, price, and risk of loss.
What to Include in Your Private Label Agreement
Intellectual Property. The critical feature of these agreements is an acknowledgement that the manufacturer retains ownership of the product recipe after the relationship. For the manufacturer, the benefit is obvious — they retain control of how the product is used in the marketplace. For the Marketer, private labeling creates a dependency problem, because the product can only be purchased from a single manufacturer. The better the product performs, the more dependent the Marketer becomes, which creates a bargaining-power disparity. A Marketer can address the imbalance with various types of contracts, like requirements contracts, which may help fix prices during the term. Because the formula is the IP layer beneath every private label deal, coordinate this with protecting your food product formulas as trade secrets.
Recalls. A private label agreement should address which party bears responsibility for product recall expenses.
Product Details. The manufacturer needs to provide the Marketer with a Specification Sheet for the product. The product specification is just about the most important document in the food industry — the information on it forms the basis for all product labeling and marketing. The Specification Sheet should include nutritional information, a full ingredient list, allergen declarations, and as many objective details about the finished product as possible (pH, water activity, viscosity, color). The Specification is the manufacturer’s warranty for the products, against which the finished product is compared upon delivery.
Extra Credit
Oversight. The Marketer should have access to the food safety records of the manufacturer that pertain to the product. Total transparency is the goal. Both parties have a duty to produce wholesome food, and if the Marketer has access to the manufacturer’s food safety documentation, the Marketer’s own quality professionals can check the work.
The commercial features of the deal should be established by thorough and concise writing: how orders are submitted, manufacturing costs, delivery dates, and payment terms are just some of the basics that need to be addressed.
Fractional General Counsel: one flat fee, continuous coverage
Running an active private label program means a new agreement, a new spec, and a new diligence cycle for every product and partner. Our Fractional General Counsel subscription folds this work into one predictable monthly fee instead of billing you per matter — the same in-house legal backing a much larger company would carry, sized for a growing food and beverage brand. Compare Service Plans →
Last reviewed: June 2026
Jason Foscolo
Founder of The Food Law Firm — fractional general counsel for food & beverage businesses nationwide.
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