Key Questions to Ask Before Entering into a Manufacturing Agreement

Key Questions to Ask Before Entering into a Manufacturing Agreement

Blog post by Stefanie Crowley-Clough

14th November, 2023

Before choosing a manufacturer or entering into any sort of manufacturing agreement, it’s crucial to ask questions to ensure that both parties have a clear understanding of the terms, expectations, and responsibilities involved.

Over the years, I’ve had the privilege of working with manufacturers in both the food and beauty/medical industries. What I’ve learned is that the initial research and fundamental questions that need to be addressed are quite similar across most industries. However, I always recommend seeking guidance from a legal expert or a field-specific expert when making critical decisions in your business.

Here are some key questions to consider:


1. References and Past Performance

  • What is your experience, and how long have you been operating in this industry?
  • Can the manufacturer provide references from previous clients?
  • What is their track record in terms of meeting deadlines and quality standards


2. Pricing and Payment Terms

  • What is the pricing structure for the manufacturing services?
  • Are there any hidden costs?
  • Are there any volume discounts or bulk order incentives?
  • What are the payment terms and schedule?


3. Quality Control and Standards:

  • What Quality Assurance (QA) or Quality Control (QC) systems do you have in place?
  • Are there specific quality standards or certifications that need to be met?
  • How will product defects and deviations from specifications be handled?
  • Are there any regulatory or compliance requirements that need to be met?
  • Who is responsible for ensuring compliance?


4. Do you own your machinery and factory, or do you outsource the work?


5. Production Capacity and Lead Times

  • What is your production capacity?
  • What are your estimated lead times for production and delivery?
  • Can you walk us through your process?
  • How will production delays be addressed


6. Intellectual Property Rights

  • Who owns the intellectual property rights for the product?
  • Are there any licensing or royalty arrangements?


7. Confidentiality and Non-Disclosure.

  • What measures are in place to protect confidential information?
  • Do you have non-disclosure agreement (NDA)?


8. Environmental and sustainability practices

  • Can you provide information about your environmental and sustainability practices?
  • What is your contingency plan in case of unexpected disruptions (e.g., supply chain issues, natural disasters)?


9. Order Quantities.

  • Are there minimum or maximum order requirements?


10. Cancellation and Termination

  • What are the terms for cancelling or terminating the agreement?
  • Are there any penalties for early termination, for both parties?


11. Shipping and Delivery.

  • Who is responsible for shipping and logistics?
  • What are the shipping terms (e.g., FOB, CIF)?


12. Warranty and Returns

  • What is the warranty policy for the manufactured products?
  • How are returns and defective products handled?


13. Insurance

  • What insurance coverage does each party have, and who is responsible for what?


14. Dispute Resolution

  • How will disputes between the parties be resolved (mediation, arbitration, litigation)?
  • Is there a jurisdiction specified for legal matters? 


15. Communication and Reporting

  • What is the communication protocol between the parties?
  • How often will progress reports be provided?


16. Change Orders:

  • How will changes to the product or production process be managed?
  • What is the process for approving change orders?


17. Insurance and Liability

These questions serve as a launchpad for manufacturing agreement discussions. Carefully document the answers and negotiate terms to protect both parties. Consult legal and industry experts for a comprehensive, legally sound agreement.

*Liability is a big one. Manufacturers may attempt to shift liability away from themselves. Ensure clarity on responsibility for defects, damages, or other issues.

  • How do you handle liability issues in our partnership?
  • Force Majeure: What happens if unforeseen events or circumstances (force majeure) affect production?


18. Exit Strategy

  • What is the plan for transitioning production to another manufacturer if necessary?
About Stef

I’m Stef, after spearheading a few start-ups, I’m here to share my small-business start-up insights.

Through my experiences, I hope to inspire others to bring their business ideas to life.

My credentials? I’m the brains behind “Don’t Dairy” and boast over a decade of expertise encompassing traditional and digital marketing, brand management, product development, and ‘starting’ start-ups


Squarespace has all the tools you need to build a great looking website and grow your business online. Whether you’re just getting started or are already an established brand, choose from flexible templates and customise them to fit your professional needs with our website builder. Sell products, services, classes, memberships and more.


Try Squarespace free for 14 days and receive 20% off your first annual purchase by using the code ONEROOF.

*Terms and conditions apply

No Comments

Sorry, the comment form is closed at this time.