Co-Packing Agreement: What to Include to Protect Your Plant

A co-packing agreement isn't a legal formality. It's the document that decides who eats the cost when a brand's forecast collapses, an ingredient price doubles, or a launch gets pulled three weeks before the run. Most drafts are written to protect the brand — this is the checklist of terms that protect your plant.

Why the Standard Co-Packing Agreement Template Fails the Plant

Search "co-packing agreement template" and you'll find documents written by brand-side lawyers for brand-side clients. Fair enough — brands hire more lawyers. But it means the first draft that lands on your desk was built to shift risk toward you. And silence in a contract is never neutral. Every term the document skips gets settled later, by whoever has more leverage at that moment.

This isn't legal advice. You still need a manufacturer-side attorney to paper the deal. But attorneys bill $300-600 an hour, and if you walk in without commercial positions, you're paying them to guess at your business. Walk in with the five terms below already decided and you'll cut the drafting bill by $2,000-5,000 — and end up with a co-manufacturing agreement that matches how your plant actually runs.

One caveat before the checklist: none of it matters with only one brand at the table. Negotiating leverage comes from pipeline, the same way it does in getting co-packing contracts in the first place.

Minimums: Per-Run, Per-Year, and What Happens Below Them

Three numbers, all in writing:

• Minimum order quantity per run. The smallest batch you'll schedule. If your kettle economics break under 1,500 cases, the MOQ is 1,500 cases — not "we'll stay flexible while they scale."
• Annual minimum volume. The floor the whole relationship is priced on. Your rate card assumed a volume. Say so in the contract.
• The shortfall remedy. What happens when they miss. Common structures: a per-case true-up payment, an automatic reprice to the lower-volume tier, or the right to reclaim reserved capacity.

Picture a 38-person sauce plant in Ohio that holds a line for a brand forecasting 40,000 cases a year. That plant turned away other work to hold the slot. If the brand ships 18,000 cases, the plant ate the difference — unless the agreement says otherwise. And a brand that refuses any minimum is telling you exactly how much it trusts its own forecast. That's the same signal you're reading when you vet an emerging CPG brand before quoting.

Forecast Lock Windows

The forecast clause is where co-packing contract terms earn their keep. A workable structure: a rolling 12-month forecast, updated monthly. Months one and two are firm — binding purchase orders. Month three can flex up or down 20%. Everything past that is planning data, not commitment.

Why it matters: you buy on lead times the brand never sees. Printed film can run 8-12 weeks. A single-sourced specialty ingredient can run longer. If the forecast can swing 40% inside the window you've already purchased against, the brand is planning its business with your cash.

Raw-Material and Packaging Liability

This is the term that hurts plants most in practice, and the one a generic co-manufacturing agreement is most likely to skip entirely. You buy ingredients, film, corrugate, and labels against the brand's forecast. Then the brand redesigns the label, reformulates, or quietly dies. Who owns the pallet of printed film sitting in your warehouse?

Get it in writing: materials purchased against a firm forecast or PO belong to the brand the moment the forecast drops or the spec changes. Stranded materials get invoiced at cost plus a handling fee, payable in 30 days. Cover shelf life too — if an ingredient expires because the brand kept pushing runs, that's the brand's loss, not yours. A $2-15M plant can be carrying $40,000-150,000 in brand-specific materials at any given moment. Without this clause, every dollar of it is your risk.

Change-Order Pricing and Repricing Triggers

Two separate mechanisms. You need both.

Change orders. Reformulations, label swaps, new SKUs, pack-size changes. Each one burns real hours — bench work, line trials, scheduling churn, scrapped materials. Put a change-order rate sheet in the agreement: a new SKU setup might run $1,500-5,000, a label change $500-1,500 plus whatever film it strands. The exact numbers are yours to set. The point is that "reasonable cooperation on changes" is not a price.

Repricing triggers. A fixed price with no escape hatch is a slow leak. Tie pricing to reality: if any ingredient or packaging input moves more than 5%, you may reprice on 30 days' notice, with an annual reprice as the floor. The number you quoted when you responded to the RFQ was built on a spec and a cost basis. The contract's job is to say, out loud, that the price dies when the assumptions do.

Termination and Wind-Down

Every co-packing relationship ends. Brands get acquired, outgrow you, or fold. The termination section decides whether it ends clean or ends in collections.

• Notice. 90-180 days for termination without cause. Thirty days is a brand-side number — you can't backfill a reserved line that fast.
• Final runs. Runs scheduled inside the notice window get completed and paid at contract price.
• Materials buy-back. All brand-specific inventory — ingredients, film, labels, corrugate — purchased at termination, at cost plus handling.
• Tooling and plates. Name who owns the dies, plates, and change parts, and who paid for them.
• Process ownership. The brand owns its recipe. Your process improvements, line configurations, and know-how stay yours. Get the carve-out in writing.

The Co-Packer Contract Checklist, on One Page

Here's the whole argument as a table you can carry into the lawyer meeting.

One last thing about leverage. Every term in that table gets easier to hold when you have three brands quoting and impossible when you have one. Building that kind of pipeline is the exact problem Feed The Line's outbound engine for co-packers was built to solve. The contract protects the plant. The pipeline is what lets you insist on the contract.

Frequently asked questions