Do you ever dream of selling your food products all over the country? While it is crucial to have a good product and business plan, you should also pay attention to the legalities. By following each step on this checklist and preparing yourself well, you will be able to launch your food business on a solid legal foundation.
- Minimize Potential Product Liability.
If consumers are injured by your products, you could be held strictly liable (that is, liable even without fault.) The best protection is to avoid selling unsafe products by focusing on food safety planning and supplier verification. You also can limit your liability by forming a limited liability business entity, having strong contracts with suppliers that include indemnification, and obtaining adequate insurance.
- Understand the Federal, State, and Local Requirements for Permits.
FDA is the federal agency responsible for regulation of foods except meat, poultry, and egg products that are regulated by USDA. Unless you operate a retail food establishments or one regulated exclusively by USDA, you are required to register with FDA any facilities that manufacture, process, pack or hold food. If you plan to produce meat, poultry, or non-shell egg products, you’ll need to apply for USDA inspection. It is also important to check your local rules for any state or municipal licenses that may be required for food processing or food service.
- Understand Applicable Food Safety Regulations.
The manufacture and service of food is heavily regulated. It is illegal to sell food that is “adulterated” or “misbranded.” “Adulteration” may involve actual contamination of food, producing food in unsanitary conditions, or manufacture of food in violation of food safety rules. “Misbranding” means any false or misleading statements or omissions on food label labeling, and failure to comply with extensive labeling regulations. Be mindful of FDA regulations under the Food Safety Modernization Act, Seafood HACCP, Juice HACCP, and Acidified & Low-Acid Canned Food (LACF) (registration and scheduled process filing). State and local governments also have their own food safety regulations.
- Check Labeling Requirements Carefully.
Mandatory label disclosures for foods include statement of identity, net quantity of contents, nutrition labeling, ingredients, allergens, and manufacturer or distributor name and address. The Food and Drug Administration (FDA) and U.S. Department of Agriculture (USDA) regulate the labeling of foods at the federal level. The Alcohol and Tobacco Tax and Trade Bureau (TTB) is responsible for the labeling of alcoholic beverages. States also may have additional label regulations, such as California’s Proposition 65.
- Be Knowledgeable of FDA Regulated Claims.
Certain claims are strictly regulated. These include Nutrient Content Claims such as “contains,” “high in,” or “good source of” a nutrient. Claims about the relationship of a food to a risk of disease (“Health Claims”) are prohibited, except when they are explicitly FDA approved. Claims that a product can be used to treat or prevent disease are strictly prohibited. Structure Function Claims, such as “calcium builds strong bones,” may be made so long as there is adequate science to back them up.
- Be Careful to Avoid Labeling and Advertising That Can Get You Sued.
Be mindful of the risk that consumers and competitors can sue you for allegedly false or misleading labeling. Potentially risky claims include terms such as “natural,” which are not formally defined by FDA and have been targets of class actions where the products contain, for example, genetically engineered ingredients (GMOs), high fructose corn syrup, and various synthetic or artificial ingredients. Other litigation targets include representations that suggest a product is healthy when it contains significant amounts of added sugar, or that it contains more of a high-value ingredient than it actually does.
- Protect Your Trade Secrets, such as Recipes.
Trade secret protection may exist in proprietary recipes, formulas, and processes. Getting nondisclosure agreements with employees, copackers, and anyone who needs access to the secrets is essential.
- Choose Your Trademark Carefully and Protect It.
Your branding is valuable intellectual property. Avoid choosing a trademark that is similar to another mark already in use or that is merely descriptive of your product. Registering your trademark with the USPTO deters others from using similar ones and gives you rights you would not otherwise have. Registration of a trademark provides favorable legal presumptions and a right to sue in federal courts, which will help you to enforce your trademark rights.