What Is a Co-Packing MSA and What Should You Actually Read

Before a single unit gets produced, you'll sign a Master Service Agreement (MSA). Most brands glance at it, sign it, and file it somewhere they'll never find it again. This is a mistake — not because MSAs are booby-trapped, but because there are four or five specific clauses that can cost you real money if you don't understand them before something goes wrong.

Here's what to actually read.

Cancellation and rescheduling fees

When you book a production slot, the co-packer turns away other work to hold that line time for you. If you cancel or move at the last minute, that's a real cost to them. Most MSAs address this with cancellation fees — typically a percentage of the scheduled run value.

At North Lakes, moving a booked slot is 25% non-refundable. Canceling within two weeks of your run date is 50% of the scheduled run. These aren't punitive — they reflect the actual cost of empty line time. What you're looking for: are the fee tiers clearly defined, and are the percentages reasonable? If a co-packer charges 100% for a cancel with 30 days' notice, that's worth pushing back on.

What happens when product doesn't meet spec

This is the clause most brands wish they'd read more carefully. If a production run fails — wrong fill weight, seal failures, contamination, anything — what does the co-packer owe you? How is the defect documented? What's the resolution process?

Some MSAs cap the co-packer's liability at the value of a single run. Others limit it to rework costs only. Very few include consequential damages — lost revenue from delayed launch, customer refunds, or downstream fulfillment costs. Know what you're agreeing to before you commit large ingredient orders to a facility.

IP and NDA language

Your formula is yours. Your production parameters, your batch records, your ingredient ratios — all yours. Make sure the MSA says so explicitly, and make sure there's NDA language preventing the co-packer from discussing your product with other clients or using your proprietary information for their own development.

Any co-packer worth working with will have this as standard language. Any co-packer that pushes back on NDA provisions is telling you something about how they operate.

Annual volume commitments and exclusivity clauses

Some MSAs include minimum annual volume commitments — you agree to run a certain number of units per year, and if you fall short, you owe the difference. This protects the co-packer's business planning, but it's a significant commitment for a brand that's still proving product-market fit.

Read this clause carefully. If it's there, understand what you're committing to and model out what happens if your volume comes in at 50% of your projection. Exclusivity clauses — which prevent you from working with other co-packers — are less common but worth flagging if you see them.

Liability caps

What's the maximum dollar amount the co-packer can be held responsible for? Many MSAs cap this at the value of the specific run in question. That means if your co-packer runs a batch incorrectly and you lose $250,000 in ingredients and production costs, you may only be entitled to recover the co-packing fee — not the value of the ingredients they wasted.

This is a negotiating point, not necessarily a deal-breaker. But knowing the cap before you commit your biggest ingredient order to a facility is important.

The spec sheet is a separate document — and equally important

The MSA governs the relationship. The spec sheet governs each specific run. Both matter, and the spec sheet deserves its own careful read before you sign it. It defines your product's production parameters — fill weight, blend instructions, allergen declarations, lot code format, packaging specs. If anything is wrong or missing on the spec sheet, that's what the production run gets measured against. More on spec sheets here.

Keep a copy somewhere you can find it

File your signed MSA somewhere organized and accessible. When something goes wrong — and at some point something will — the first thing you'll need is your contract. "I think I have it somewhere" is not a good place to be when you're disputing a charge or navigating a production failure.