It’s a great time to start your own food and drink business in the UK. With pop-up mania sweeping through London, you’re never far away from your next slider/artisan coffee/craft ale/organic-paleo-clean eating-vegan snack.
With almost a third of new businesses in the next two years estimated to start life as a popup, it’s easy to get carried away with your foodie dream. Whilst it’s great to explore a new food and drink business, keeping your food and drink startup secure and on the right side of the law will be essential for its future growth and success. Here are the top 5 areas you should be looking out for when starting your food and drink dream:
- Choosing the right business structure
If your business will be based in the UK, you have the choice of a number of different trading vehicles:
Sole trader: This is where you run your business as an individual. You can employ staff as a sole trader but it is ultimately you that is personally responsible for the business. This includes any losses the business makes.
Limited company: This is where you have a company that is responsible in its own right for its liabilities, and its finances are separate to yours. It is likely that you will be a shareholder and a director of the company from the start, the latter carrying a number of legal responsibilities that you will need to consider.
Limited liability partnership: You can either structure a limited partnership or a limited liability partnership. The latter is where the partners aren’t personally liable for debts, their liability is limited to the amount of money they invest in the business. Limited partnerships, on the other hand, allow ‘general’ and ‘limited’ partners with the general partners being personally liable for the partnerships debts and the limited partners only responsible for the amount they initially invest in the business.
2. Making sure the name, branding and packaging designs are legal and secure
Just like the big brands, startups need to protect their intellectual property. It’s what makes them unique, and being able to prevent others from copying them keeps them unique. Doing a trademark search is a good first step where names, logos and the shape of packaging are concerned. It’s also worth researching variations of your name to see what else comes up. If you’ve already spotted another brand in the same industry using a similar or identical name, now is a good time to consider an alternative as this can lead to confusion later. When it comes to images, if you’re going to use a stock photo make sure you get the right licence, and keep a copy of it. Also, you need to make sure your designers transfer over the rights to use your intellectual property.
3. Reading contracts carefully
Loan agreements, shareholder agreements, distribution agreements and supplier agreements…the list seems to go on forever. Remember that as a business, the onus is on you to read the terms carefully. If there’s something you’re unsure of, query it. If you’re not happy with the answer, don’t sign it and get a second opinion from a legally qualified expert in the field.
4. Making all the right information available
Before you can start trading, you need to get yourself familiar with the Food Standards Authority, Trading Standards and the Advertising Standards Authority. These bodies regulate what information you need to make available to the public, and to them. Whilst going through checklists and documents is tedious, this step is important in ensuring you’re on the right side of the authorities and that the health and safety aspects of your business are in order. Here’s just some of the information you’re going to need to make available, and rules you need to be aware of:
- Ingredients info
- Allergen info
- Written records of all the suppliers that provide you with food or any food ingredients
- General Food Law Requirements
- Putting food safety management procedures in place and keeping up to date records of them
- Food and hygiene training for staff
The FSA (Food Standards Agency) have produced some great resources for food businesses, so make sure you read these before you start trading.
5. Getting licensed
In addition to bodies such as the FSA, you also need to contact the council to register your business if you want to carry out any ‘food operations’, even if the premises if your home. If you’re also looking to sell and supply alcohol, you must also apply for an alcohol licence from the council. The GOV.UK licence finder tool lets you easily work out what licence you need for your business, and how to go about getting one.
We help start-ups and early stage companies to protect and grow their business. We do this by acting as an in house legal department that is on hand to assist the business whenever a legal matter arises. Unlike a traditional law firm, we don’t charge by the hour and we won’t charge for each phone call or email. Instead, all of our fees are fixed and agreed with you upfront. We work with a number of food and drink startups and we will be delighted to talk to you about some of the useful insights we’ve found while working with them. If you don’t believe us, check out our ‘Success Story’ from Jimmy’s Iced Coffee to see how Hybrid helped them and their startup.