Food Business Legal 101 - Food Business Legal 101 Recording

November 13, 2020

The session provided an introduction to some of the laws governing the food industry for those seeking to establish or expand a food business in the State of Michigan.

On October 28, 2020, the Michigan Good Food Fund and MSU Product Center hosted Food Business Legal 101, featuring attorney Pamela Mack, Mack Law Group. The session provided an introduction to some of the laws governing the food industry for those seeking to establish or expand a food business in the State of Michigan. Topics include licensing, a discussion of cottage food businesses, and choosing an appropriate business structure. 

Video Transcript

Welcome everyone. We're just about to get started with our webinar food business legal one-on-one featuring Pamela Mack. Let's see who's who's awesome times. See familiar faces. Good morning. Good morning. We're still adding more people. Thank you for joining us this morning. I see Rene from skin. I see Olivia from the Detroit area. C print a row down in southeast Michigan. Welcome everybody. Well, we'll go ahead and get started. My name is Jamie. Very welcome you to this webinar sponsored by the Michigan Good Food fund and through the MSU product Center. Today we'll be discussing all things that you need to know for your food business that could affect you legally, and information that you might need to know to keep your business safe. Warning to everyone. So first I'll introduce myself and then I'll introduce Pamela. I'm Jamie rarer Gaiman, innovation counselor, and I manage the Michigan Good Food fund for MSU setup regional food systems. And in part of the MSU product Center team. I'll tell you a little bit about the Good Food Fund and the product Center in a minute here. First, I'd like to introduce you to Pamela Mac. She is our presenter for the day. Pamela is the founding and managing member of the firm, the Mac law group. She concentrates or practice in the areas of corporate commercial transactions and legacy planning. She provides counsel and advice to businesses, business owners and their families, and writes a monthly blog, The nosey lawyer. Before opening her firm, she was a senior legal counsel or for RGIS, a Blackstone Group company. And prior to that, worked for the Kmart Corporation and their real estate division. She brings the breadth of knowledge and expertise to her firm, small and high dollar value business clients and their families. She's a mom and an author of a children's book called My name is Judah, and she is from Michigan herself. So thank you for joining us and I will turn it over to you in a second. You're right after. I'll share a little bit about the Michigan Good Food Fund and the work that we're doing. The Michigan Good Food Fund is a $30 million loan fund that we helped to provide access to financing and business assistance to help food and foreign businesses become what we call lone ready. Making sure you have those documentations and place that you might need for your loan application. We do this through a partnership. Michigan State Center for Regional Food Systems is one of the technical assistance providers within the partnership. And we worked really closely with lending institutions. One of our funders, the Kellogg Foundation and the Fair Food Network. The program is mission-driven. And when I say that, that means that we focus on these five things. We look for food and foreign businesses that are providing healthy food access, addressing economic development and creating jobs for our state. Using a racial and social equity lens. Sourcing local or maybe growing local, and then consider environmental stewardship in their business practices. The MSU product center helps to bring food products to the market. We have a team located all around the state, often in MSU Extension offices that work counseling and coaching food businesses and farmers to our services. We can also provide market analysis studies and product testing can help you get your label ready for retail. Last year, the product Center team saw 774 businesses and help to create almost 450 new jobs. We have food processing, an innovation center that's located in openness, that is available for businesses to use, rent out, whether for research and design or in order for them to produce their product. Our premier event each year is called Making it in Michigan. Typically we will the in-person in November. We aren't able to do that this year. And we typically have about a 150 food products makers in big expo hall sharing their products in trying to get picked up by retail buyers. Coming up. Next is our cook share and prosper event. It's a two hour workshop that we'll talk about what people need to know for their food business around packaging, shipping, consumer trends, social media, and how to share your pitch. There is a $15 charge for this. If you're a good food fund mission fit business, then we can get that for you for half off. Okay, so I'm gonna stop sharing my screen now and turn it over to Pamela. Pamela, If I'm sorry, I see a chat question in the chat. Yes. We are recording it in. It will be available afterwards. I will also say that we're all still at MSU. Bunch of us, most of us are working from home. So I will provide you any grace as far as noises in the background from leaf blowers to LAN lawnmowers and the garbage truck. If you could please for myself and bam, we'll look to. And supposedly I write Pamela, Well, I'll turn it over to you. Thank you. Thank you, Jamie very much for that introduction and welcome everyone. I'm very excited to join you this morning and thank you for Chase, Jamie, for the announcement about the work from home. I am also working from home and I'm also overseeing a virtual student who was doing virtual learning and there's a dog, so anything could happen. But I welcome to food business legal. And Pamela Mac, your presenter today. And I am the principal attorney, the law for the Mac Law Group. Where me Mind your business, MY mind your legacy by providing business related legal services and advice and counsel on estate planning. It is my pleasure to join you today. Welcome. So here's our agenda for today. It is quite ambitious. We will start with a very high level general overview of the laws that govern business and they're quite expansive. We'll spend some time also discussing ways to protect your valuable assets by way of an overview of trade secrets. And we will conclude today by discussing an overview of business structures that you might consider for your organization. I will start by saying that, as Jamie indicated, there are a lot of resources that are available to you through the Michigan Good Food Fund. And so I would encourage you as you get your high level overview today too, if you have an inclination to get a deeper understanding of some of these laws that you reach out to them for advice and counsel. Cell for the laws governing the food business. Let's look at laws which govern the food business in the United States. Their federal and state laws and local ordinances that impact the production, the distribution, marketing, and consumption of food. In the United States. There are about 30 federal laws implemented by about 15 federal agencies that deal with one or more aspects of the food and beverage industry. The state and local government governments administer federal rules by conducting investigations in enforcing the federal standards. There are also local ordinances. The primary laws that we're going to focus on today in the state of Michigan govern the food business. It would be the Michigan food law in the Michigan food CO So I'm going to limit my discussions today to those two. Although again, there are many more. So food lost. The primary purpose of food loss is to make certain that food is safe, unadulterated, and honestly presented. If you think about the fact that food comes in and is consumed by people, dig, it seems logical that there should be a framework of laws that would govern and make certain that the food is safe and that it is not filled with bad things. And that it's presented in a way that honestly advises the consumer of what's in it. So the established rules and regulations are all really designed to make certain that these purposes are met. And these laws set the standards by which FO food operators, management and personnels and personnel operate. It also set standards for equipment and facilities that are used to produ, produce the food and drink. And it sets standards for food establishments that serve or distribute the food. The law also provides for licensing and regulation of certain persons that are engaged in the selling of food. Of course, that's a mouthful. Let's look at the ways in which the licenses and regulations, What is designed to do. It's really designed. The licenses and regulations govern certainly people that are engaged in processing, manufacturing, packaging, preparing, canning, preserving, freezing, fabricating, storing, selling, serving, or offering for sale of food and drink for human consumption. Now, if you are a food establishment, as defined by the food law, you are required to have a license in order to operate. Of course, there are certain people and food establishment that are exempt from licensing and inspection provisions of the law. We are not going to go over every one of those, but we aren't going to give some consideration today to Cottage foods, which some of you might be operating or thinking of operating in this industry. So we're going to give it a high level overview. So although you're not required to be licensed and inspect it as an initial matter, you still have to comply if you're in this industry with labeling, adulteration, and other provisions that may apply to your business, state, federal, or local in nature. Today we're going to look at one of the exceptions again, which would be the cottage food industry. So what do you need to be in the cottage food industry? Well, there are specific types of foods that are off arise that you make in your single-family primary residence within the state of Michigan. These the law deems that some of these foods are relatively low risk in terms of what? They're relatively low in terms of risk. So as to allow the operators to bypass some of the licensing and inspection requirements that may be required required for other food businesses. So the foods must be nine, potentially hazardous and not required time or temperature control for safety. Again, the statute itself is quite specific and we're going to give it a high level treatment today present we're gonna go over some of the types of foods that may qualify as Cottage Food. The statute say that certain jam and jellies, bread, another similar baked goods. These cakes, vinegars, are all, they all qualify as Cottage Food. If you meet other certain conditions, what are not included as Cottage foods and would be still subject to licensing. Or those salsas, beverages, certain other jams, what tomatoes or other vegetables. So again, this is not a comprehensive list. It just, the purpose of sharing this is for you to give some thought to maybe your particular food item, my qualify as a cabbage food. And after the presentation is over, I'm going to take some questions so I want to make sure you know that. So what are some of the requirements and limitations? First, the credits foods, if you have a Cottage Food, it must be pre-packaged, improperly labeled. I will say this. I'm not sure of the audience on the phone, on the call today are the video chat today. But what I notice when I'm a lot of people have approached me about how do I prepare for the holidays. I'd bake cookies or I baked cupcakes and I'm interested in preparing my food for the holidays. And as they presented per cell, I noticed that sometimes they do not include proper labeling is very important in the statute sets this fourth and the Michigan Good or food fun has courses on this. These things have to be properly labeled. So they have to include at a minimum, your address, the address from which the food is prepared, the name of the person preparing it, the name of the company has to have ingredients. So keep that in mind as you are thinking about if you're interested in moving toward this. As, you know, as a profession, as a business, that your items are going to have to be pre-packaged, improperly labeled. The other thing is they have to be prepared and stored at your primary domestic residents. So throughout this course, I'm going to use Pamela's cookies as an example. So say for example, I decide, okay, I'm going to bake cookies and I'm going to sell them, they qualify as Cottage foods. I'm going to bake them in my home wherever I've lived, say I live in let's say YLL. Okay. And I do that all winter long. And then in the summer I go up to my summer home in trapper city. While I cannot bake from Traverse City and sell because they have to my food business is out of my primary domestic residents. They have to be sold directly from the Kaddish food operator to the consumer only. So this is important. There can be no internet sales, no consignment sales, no wholesale, no cells to restaurant, restaurants known malware or sales. Now you can select farmer's markets and there are other places where there are face-to-face direct sales where it's permissible. So the question often comes up, well, gee, can I even advertise on the internet? Sure, you can have an Internet website where you show your product, but the end still has to be face to face. You also are not exempt from good food handling guidelines that present prevent adulteration. So you still have to operate in a way such that your food is safe. And if you are if someone files a complaint, then your the operation might be subject to further inspection. The other limitation is that growing sales are limited to $25 thousand annually. So that's the high level overview of the cottage food industry and the laws. So written to spend some time now taking a look at the fact that so now you've got a product or, and you're about to start your business or you're going to expand your business. Let's take a look at what you might need to know in what you might need to do in order to protect what you have from being misappropriated. Or you're going to spend some time now talking about concept in the law caught trade secrets. Now trade secrets is a category of what we call intellectual property. So today we're going to just talk about trade secret, what it is, how it might relate to the food business, and what steps you might need to take or you, you should consider taking in order to protect your trade secrets. So by definition, the trade secret is information hat that has either actual or potential independent economic value. By virtue of not being generally known. It has value to others who cannot legitimately obtain the information, and it is subject to reasonable efforts to maintain and Sacred Sea. All three elements are require, a required and if any of these elements ceased to exist, then the trade secret will also exist. Ceased to exist. Let's talk and keep in mind that that you will need to take certain steps and maintain the steps in order to protect your trade secrets. So let's look at the laws governing trade secret, the area, the federal laws, contin, Uniform Trade Secret Act. There's the Michigan Uniform Trade Secrets Act. And what they do is they both provide remedies for misappropriation of trade secrets. Is that defend trade secrets. Federal statute that allows US employers to protect against misappropriation of trade secret in federal court. And then there's the Economic Espionage Act. And it provides for criminal sanctions for the misappropriation of trade secrets, including the institution of fines requiring restitution and prison time up to ten years. The elements of a mystic and trade secrets claim is that you have a trade secret, that there was a confidential disclosure of that trade secret to another person, and that that person wrongfully used or disclosed your trade secret, which is considered a misappropriation, and you've had damages as the result. So really these actions are more defensive than they are in terms of, you know, going out and registering. These are actions that you can take, watched someone tries to misappropriate or has appropriated your trade secret. So now let's look at what's trade secrets to detect so that you can see how it relates to the food business. Now trade secrets protect formulas, drawings, patterns, customer list, programs, devices, methods, techniques, or processes. Secrets can also encompass customer identities, pricing information, current research projects, and even some failed projects. The good news is that your recipes, your customer, your or your special dishes, can be considered as formulas, methods, or processes, and they can be legally protect it. So now let's talk about a lot of legal theory and there's a lot of legal language. Let's talk about some practical applications by looking at famous trade secrets that you might know about. So we have, of course, everyone knows that Coca-Cola has a secret recipe. They've been able to keep that trade secret for over 100 years. Everyone knows about KFC, Colonel Sanders recipe of 11 herbs and ******. There's Big Macs, secret sauce, McDonald's Big Mac secret sauce. What may not know is that WD 40 had a secret, rest has a trade secret. And FEG, WD forties name comes from the 40th try by scientists to come up with a water displacement formula for rust prevention. So solvent and degreaser. The aerospace industry, not only is that formula I trade secret, but also the other 39 failed attempt formulas are also trade secret. So you can imagine that these trade secrets give these companies a great competitive advantage. So they go to great lengths to make certain that they are protected. Kfc, to protect it. This 11 herbs and ****** recipe has a high-tech home with a digital camera and I'm reading this, I had to. It's a digital save weighing more than 770 pounds, encased in two feet of concrete with 24-hour video surveillance and motion detect and detection. Of course, competitors would love to get their hands on the Secrets. And if a trade secret is not properly managed, accompany can quickly lose its quit competitive advantage. It's also important to note that only insiders are required to keep the company secrets, secret and not outsiders. We're going to talk about that a little bit. So how do they protect their trade secrets? And what might you do to protect jewelers? First of, is a very, very important that you start early protecting what might be your trade secrets. You need to safe guard them. Or otherwise, you could lose the benefit of having a trade secret because if something is widely known, it's not a trade secret and it's not even a sacred. So here are some steps that you can take. And again, the earlier the better. You'll want to limit access to your customer list, your recipes, your processes, to the extent that you can, to your key employees. You also want to limit access to trusted embedded vendors. So let me talk, let me pause here for a second and talk about trusted embedded vendors. Say for example, you have a, you have a recipe that's a dry mix that you want to package and mass produce and send to the public. Well, you've gotta find you. You've determined that you cannot do it yourself. So you want to send that out to a manufacturer? Well, when you send this out to a manufacturer, you have to do your due diligence. You have to make certain that these people are reputable, that they'd been in her field long enough that they're trusted and they are properly vetted. Because what you're doing is you're delivering your trade secret to them. So the first thing you need to do is your proper vetting. The next thing you need to do is when they present you with an agreement, you want to make certain that you take the proper precautions to have that agreement. Reviewed by council? I would suggest by a council because you'll want to make certain that there are appropriate confidentiality and non-compete clauses in that agreement. In essence, making certain that those recipes, whatever you're delivering to them, are kept confidential and that they can't take your recipes and then compete against chew. With those recipes. You want the same thing for your key employees. You want to make certain that they are properly vetted and that they are under confidentiality and non-compete agreements as well. The other thing, as we indicated, as indicated with that KFC example, you want to make certain that your recipes and your customer list and things that are intellectual property to you are kept under lock and key. That and i would also be cautious about keeping your recipes in the cloud or on a computer. Because of course, computers are always subject to hacking. If you keep your recipe in the cloud, somewhere on a cloud computing, those servers may be subject to hacking. Now of course, you may not have the resources or it may not be inclined to create something that is concrete. But you may want to consider keeping your recipes in a safe. Because again, the better practices She was established early on, the more likely you are able to demonstrate that this is in fact a trade secret because you took the proper precautions to protect them. You need to implement policies and procedures to protect your trade secrets. You might be a young or an upstart right now, but you need to have policies and procedures in place so that as you grow and expand your staff, that your key employees, no. We have to constantly talk about the fact that we have a trade secret, that it is not widely known, that those who are, who had access to it, that they are aware and they're constantly reminded that they cannot disclose those secrets. This is another really key point as well. You want to quantify the dollar about you of your products. Say for example, you have a trade secret, a recipe, and it is selling now I don't know, maybe Mrs. females think of Mrs. Fields Cookies. We need to start tracking, byproduct what those sales are. Because again, if someone misappropriate, you're going to have to prove to the court that it is a secret and actually that it had value. So the earlier you start tracking the value of your products, the more evidence you have that what you have is a trade secret with value. You need to constantly train your employees and you should document your trainings. That's a part of your policies and procedures. So you need to say, okay, annually we're going to go and train our employees that what we do is sacred. And those of you who have access to the trade sacred, you are required to keep it safe. And again, as you grow, these things should be in place as your foundation and will help you to establish your trade secrets because who knows you could be the next Colonel Sanders was a secret recipe that, or Coca-Cola with a recipe that has lasted years and years and years. Finally, Azure relating as you're talking to your vendors and your just want to every year remind them that they have confidentiality, that it has to be maintained. And so if you do those things, you should be establishing a foundation for establishing that you have a trade secret that is worthy of protection. So now that we've covered what your trade secrets and your products, let's take a look at ways to protect what belongs to you like your personal assets. So we're going to spend this final, the final few minutes of the presentation going over legal structure and protecting yourself. The main types of legal structures that are available would be the sole proprietorship. Limited liability companies S, corpse, see corpse, and there are some partnerships and limited partnerships. But for purposes of our discussion today, we're just going to talk about these four forms. The simplest form, usually one person who owns and operates a business as a sole proprietorship. It's simple because there are no real formal requirements to establish a sole proprietorship. You just get up and you start a business. However, it's important to know that if you are using a name and your business that is other than your own name. It's going back to my example, Pamela's cookies. I have to let the world know that really Pamela's cookies is Pamela de nice match. So that would require a filing of a what's called a dba or doing business as with your local county government. If you're operating as a sole proprietorship, operating under a name that's other than your own, you need to file that with your local county government. Having said that, I want to claim the notion as simply filing with the state of Michigan, filing your name with local county government does not give you rights to a name. It doesn't give you trademark protection for the name. You need to take additional steps to do that. What this does is it allows the world to know who is operating. And it also provides a way for legal notice to be given to people who are operating a sole proprietorship. In terms of taxation, your expenses and your income from your business are included on your personal tax return. What that might look like is say for example, I just started, this is sort of a side operation for me. I start a business, but I still operate. I still go to work and I have a W2. So what would happen is your income tax would look like not only your W2 income, but on top of that, expenses and income from your business would be added to your personal tax return. Let's take a moment to talk about liability and what it means to operate in this form, and what the risk are for doing that. If you operate as a sole proprietorship, you have no protection against company liability. So what that means is, going back to my example of Pamela's cookies. I'm operating Pamela's cookies. Someone eats my cookies. As a reaction to the cookies, says I didn't properly labeled them. They had maybe they had a peanut allergy that gets sick, and they want to file a lawsuit operating under the form of a sole proprietorship will allow that person to come not only against what you might have in your business account, but it also allows them to access your personal assets. So while sole proprietorships are easy to form and you don't have to do much. There is quite a bit of significant risk to put in your house, your personal assets at risk. And the if you are, you know, if your company has liabilities. The next form that most people know about, that still is relatively easy to establish and has a lower cost, are limited liability companies. Limited liability companies do require registration of the articles of organization with the state of Michigan. The owners of the company are called members. And the benefit to limited liability companies is that your liability is limited to business assets. So going back to my Pamela's cookies example, what would happen if someone's suit, my my company, they really would be limited to what? My company had assets of my company. So when accompanied bank accounts, other assets, the taxation of limited liabilities are generally of limited liability. Companies are generally a flowed through to the personal tax of the business owner. Although owners can choose a different type of taxation, S corpse and see corpse are again registered with the state of Michigan. The articles of incorporation or is the document that has to be formed their owners or stockholders, they're not members, their stock holders. Now, these two forms are a little bit more complex and generally require professional services, either legal services or accounting services just because they're a little bit more complex in terms of their operation. S corpse are taxed as a passthrough to your personal taxes. See, corpse are taxed at the corporate level. So the corporation itself has to pay taxes. And then the shareholders. The company had to pay taxes. Now word about limitation of liability. I said you do enjoy limitation of liability with these types of business structure, the limited liability companies, the S-Corp and the C corpse. Keep in mind, though. There's always, there's a slight caveat to things. You need to maintain corporate formality. When I say that, what I mean is you cannot act as if you have a corporation and still use your personal assets, mixing and mingling personal assets, not properly capitalizing your companies can put you at risk of someone saying, hey, this is not really a company because they don't have a dog on thing in this company, they don't have any money, they don't have the acids. So that's a limit, a very narrow opportunity to sell them for someone to get to your personal assets. So I encourage you to, as you're setting up your business, is to always maintain corporate formality. And you should be pretty safe when you're operating within those two entities or these types of entities. That's it for my presentation today. I'm really grateful for the opportunity to spend some time with you. I can now field questions so much. That was, that was excellent information and there's been really robust chat going on. And we do have some questions towards the top of the chat and just let you know some of the things that we've been talking about. The 20-20 pandemic has created some changes in our world for sure. A lot of the farmers markets weren't necessarily allowing the cottage food vendors to sell there. So people were trying to pivot and sell their products online. So tomorrow, I hope I said your name right. She let me know that there is an opportunity now to be able to sell Cottage Food products online as long as you're distributing them direct to your customer. A change that MSU Extension and Michigan Department of Agriculture have been talking about this year. So thank you to the products and her team who's on this call for helping me figure that all out to. Thank you. Thank you. Thank you. I'm going to do what you like me to stop sharing my screen, and we can do that. Okay. Very good. Thank you. Oh, so Chef Q or she was wondering if you would be willing to share your slides. Sir, so yes, I would be. Okay. People if they watch the recording, they can also see the slides there as well. Sure. So I did include and will include maybe I can include my information in the chat if you would like a copy of the slides, just email us. And would that be okay indefinitely? The recording will take me a few days to get a room. So we see today's Wednesday, so maybe took back Monday or something to find it online and you will get an email with a link to the website where we post our webinar recordings products Center. For those of you wondering, okay. Some of the other questions. May she asked when you gave the cookie example? She said, can you sell your cookies? And Trevor city, if you were up there, for example, for five months, wouldn't you be storing them in traversing? The statute requires that the suit that the food is sold from your primary residence. So if you're if Trevor city, if you live in Southfield and you're just visiting travelers city as a second home. You cannot sell your food from there because it's not your primary residence. Into clarify, you wouldn't be able to make the cookies in your Trevor city whom kitchen and sell them in the right. They have this outfield. Right. Because they have to be stored in your primary residence as well. So if you are not, if you take the mob, even if you cook them and South and you take them up to traverse city, you're storing them in a place that's not your primary residence. Okay. Great. Thank you, friends. Could you define the word adulteration? You use that room? Adulteration is is defined in the statute and it relates to the conditions of your poetry. Okay, I don't have to pull it up. It is defined in the statute, but it can't be when you're cooking. It cannot be in a place that has insects that has certain there are certain conditions. I can get the exact definition for you. The statute actually lays that out. I would encourage you. There are trainings that are available to you if you want to, if you're cooking in your primary residence, there are food handling and other trainings that are available through the state and probably also through the good michigan good food fund. That will give you more details into that. Can't be mix your food can have harmful contaminants in them. Okay. Thank you very much. And just to let everybody know to I've been sharing some links. Msu Extension offers at Cottage Food class. We put the link in the chat box B, excuse me, and also a link to the Michigan Department of Agriculture's information about writing a cottage food business. A question about labeling was asked, so that's all available in those links in the chat. And then coming up in November on the 19th, a colleague of mine from extension, we will be running a class called business money management. That's really for anybody who is thinking about starting a business. So you can learn more there, not necessarily just food but any business. Can I go back to something I just want to clarify something. I did mention. That your food can be presented online. It can you can have a website. You can have a website. Nothing in the law prevents you from having us website had been showing your food there. You just have to ultimately sell it face to face. I hope I was clear when I said that. I think what you're saying is that that now the law has changed to allow the the actual exchange of funds to be made online. Is that the clarification that your team was trying to make? If I could. Okay. So I'm looking at the comment. This inspector has been saying that sales can occur online as long as the actual exchange of foods and person direct to consumer, they're not going to know this through a formal press release. So what I would say, you know, I'm not sure about the inspectors. What they're telling you is I would comply with what the actual lies for now, but secretly, it they have not. I did not see a formal change in the law regarding this. So again, there are many ways now that people can contact list. Exchange, money, exchange meat, you know, cash, Whatever you don't have to go with cash. You can always, you know, accept cards or things like that. But the ultimate exchange of the money and the food has to be face to face. I don't see in the law, but that has changed and I just wanted to make certain that clarified that. Thank you. Yes. The law hasn't changed. What Michigan Department of Ag has on their website is still the same. But I definitely if you don't know your MD art inspector, get to know them and ask them questions. Oftentimes, farmers market, you can get to know that person through the farmer's market manager to a deaf. Yeah, definitely do what they did. Would they recommend and Product Center team that's on this webinar, they are saying the law has not changed. And yeah, so definitely check. I saw a chat from Madison. Madison with the webinar. We cannot see or hear you if you'd like to speak up. I'm happy to unmute you. I do have another question, pamela, from Parker. It says, I've heard a few food businesses refusing to work with contract manufacturers who produce their product for them because the non-disclosure they would sign for the work would only last three or 45 years. After this period. People feel that their recipe is no longer protected and could be stolen. Do you have any thoughts on that and what happens after that non-disclosure agreement expires. So that's why you have to have the right agreements in place. No way would I ever advise my clients to sign an agreement that would require then the contract manufacturer to only keep my trade secrets protected for three to five years. You can see that there are other organizations, many of them, you move too many to name that have been had worked with other contractors and have kept their trade secrets private. So what their trade secrets protected and they have to be protected for the amount of time. Otherwise, if you do not get this contract manufacturer to keep your, your trade secret secret forever, then what you're signing up for is not to have a trade secret. Because the whole notion of trade secrecy is that you have to keep it, keep your trade secrets protected. So what I would recommend is that, again, this is a very critical step. You seek counsel who will properly draft the agreement that has me everything that they do a secret. It's just that the narrow portion of what they have for you, the, the the trade seekers that you have, that narrow band of information has to be kept secret in perpetuity. Does that makes I hope that I clarify hope I've made that clear. Don't sign anything with any body including employees where you're giving away your trade secrets forever, that there's a limited time on. There should be no limit of time on that. Great. Thank you. I'm going to move over to the Q and a box and read the question to, what if what if you were to sell an item to somebody face-to-face may order a large quantity and you do not know if their intent is to sell it in their store? I think. What if you get to be on the safe side, okay. You should let them know that you are in the food business and that you are not allowed to sell. I mean, if if the if the person is from a store and wants to resell your item, if you're getting large quantity, you might want to ask, I guess this for your own personal use. Or is it in especially if you know that they are connected with the story you intended to tell it, sell it to a store because I'm not allowed to do that. Can not we may not resell my products. That's good. Yeah. Thank you. Nicholas asks Can I solely wife's bread at the market? Them. So it's a product that she makes, but he would be the person selling it. I think the manufacturers, the person, the person who creates the product is the person that has to sell it? I believe so. If they had a legal business license where they're both on the license. Okay. I'm sorry. I don't know. I just I'm just putting it out there as another option. Then you yeah. Yeah. Yeah. Right. Okay. Again, my assumption is my my my brain is going toward Cottage Food. That for the Cotard's food, it has to be that individual. But if they are the other persons in the license than they would be if they were covered by the lights of the GSA. Okay. Awesome. Thank you. And another one, how do you keep a trade secret regarding ingredients when there are disclosure requirements for allergy reasons, like nutrition labels. Yeah, so there are ways to do it. You're going to need to contact council to make sure that you properly crafted in a way to maintain your Craig your trade secrets while complying with labeling. Keep in mind that this is done every day. Every day about fungi and candies. Can I make funding candies under the credit? Boom? Some candies. I'm not sure about fudge. I'd have to look at that. Yep. And that's available on the Michigan Department of Ag L2. And then you'd learn all about that on the Cottage Food webinar. If you participate in that training by an extension. And if you keep it in the chat, maybe one of my colleagues will help answer that. I've see Parker and Jay and Diane or online here maybe they had the answer about Fudge. I write. Next step is question about a smoothie beverage line. What would be the best option if the cottage food law isn't applicable? And then license go through and you would go through the formal license product to have your your your product licensed or your organization license to sell it. In the MSU product Center offers a class periodically cobe, launching your commercial food business. So that would be appropriate for somebody who maybe started his Cottage Food or maybe has a product like salsa that isn't eligible under Cottage Food for you to, to learn more about that. If you go to the product Center, website, MSU product Center, and go wonder news. There are lots and lots of articles that have some of these answers in them. And I definitely recommend people sign up if you're not already a Product Center client or contacting me with the Michigan Good Food fund, I would definitely recommend that you do so. Lots of great resources available. Okay. Right now we're at 1053. I want to make sure that we end on time. So I'm going to take a couple more questions and then we'll wrap it up, okay? Alright. I have a I have kind of a longer, longer question. It says, we move to a small farm in October last year, and we were planning to sell fruit vegetables, cottage foods at a farm stand as well as farmer's markets. At the end with the pandemic, we weren't able to. We have expenses for setting up the infrastructure for the farm, bind the fruit trees, fencing. We have not yet set up an LLC, but are planning to eventually can we claim are 20-20 expenses as sole proprietorship without having an income yet? That's an accounting questions. That isn't accounting question. I would advise that you would contact your your your financial advisor, your accountant, and they can help you with that. Great. Oftentimes we say we're not an attorney or are we and accountants? And we definitely recommend you make sure that you have some great resource people in your hit rate. Let's see one mark. This Gretchen. She says I have a spice mix. That's a commercial mix. And one of my retailers asked about expiration dates. What can I say? For my ******? I don't see explorations on the original ******. I think this is a great question for somebody from the product Center. In a if you want to defer that one. Yeah, I'll defer that one. Okay. Again, you know, the the the real beauty and dealing with the Michigan Good Food Fund is that some of these very, very specific questions about types of food labeling, nutritional value late on, on your foods. Those types of questions are really best left to these experts. This is where they live and the resources that are readily available to you, where I would advise that you would seek legal counsel. Obviously, you could seek legal counsel for any of this right. These are all in Bissell involves a law. But really for for purposes of this presentation where I think you really want to spend your time with lawyers, are dealing with your confidentiality agreements, getting your processes and procedures in place really before move toward the manufacturing of your product. If you believe you have trade secrets making, sir, you have those foundational things and places of great. Start with an attorney, right? Your confidentiality agreements with your employees, your non competes and those kinds of things. And then if you have more, you know, if you have more questions as it relates to some of these other items after you, you know, sort of contacted the resources here at the Michigan but food bond then, you know, then have those conversations. What council but again, you know, I really would implore you to make certain that you have your foundational things and placed as you start to grow your business. Good, good scientists, dietitians, picketing, support, tuition rebels in team of innovation councillors that they felt. These pursuits too. And I see that Brenda helped us out and set much is allowed under cottage fit. So just education. Everybody, I see reading the chat. I see Tiana asks, are there any recommendations for IP lawyers, please contact me. I am and I do cover a trademark and copyright, not patent. But I can make a recommendation if there are any patent issues that can make a recommendation. So please feel free to shoot me an email. C. It sounds like there's still a lot of questions around shipping directly to a person. Tory is if this is around Cottage Food, I would still again go back to that Michigan Department of Agriculture inspector to check in. And just to double-check, again, it's it's 20-20 and everything's change, right? Things change before we know it. That's your best. You generally speaking though, there is no mail order and you cannot have somebody else ship or you, you know, deliver for you. But again, you know, check with your inspectors to see how much enforcement of the law they're doing. Right. So they may stuff they know and enforce this. I'm just not sure. I can only tell you what the law states. Okay. Well, I want to I'm going to share my screen when we're team to make sure that you all have curriculum Tifton for Nathan. Please. Excuse me for a ticket. Please go ahead and feel free to email me. Like I said, we will share the reporting, the link to the recording. And PMO has been kind enough to offer to share her slides. But again, you will be able to see those within the recording. Here's some information of where to go to learn more. You can follow the MSU product Center and the good food fund on Facebook we've, especially this year have been posting a lot of funding opportunities and a lot of learning opportunities that are coming up, as well as some success stories. So please follow us there and feel free to reach out. You can go on the Michigan Good Food Fund website and complete an inquiry form. Or you can go onto the products center site and register as a new client and new business and be assigned an innovation counselor or business Coltrane, one-on-one with you. So that wraps up that wraps up our session today. And I thank you for joining us and please feel free to reach out if you have any questions. Thank you. Thank you. Pamela. food-biz-legal-10-28-2020-recording

From Jamie Kay Rahrig on November 2nd, 2020  

 

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