The Startup CPG Podcast

Anthony Iuzzolino
Getting an agreement in place is really important. I think you touched on this earlier, Daniel. It's the backbone of your company. What do you do? You sell a product. So you need agreements in place to define the relationship of the person who makes your product and then who then gets your product out to the customer. You know, 99% of our clients don't actually make their product. They have a co packer, they rely on suppliers. They're not self manufacturing, they're not necessarily vertically integrated. So these relationships have added importance.

00:44
Daniel Scharff
Hello my friends and welcome to the startup CPG podcast. Today we are diving deep into the world of operations from a legal perspective. I love these kind of topics because the contracts that you sign with your co manufacturers and distribution partners can make or break your business. So having the chance to talk to some people who have done it so many times before and advised so many brands is incredible. And today we've got two of the best lawyers. From Gianuzzi Luindin, we've got Anthony Usulino who has been with them since their start 15 years ago and goes very deep on co packing and distribution agreements. We've also got Ryan hall who has a decade of experience guiding CPG brands from formation to exit and everything in between. Gianuzzi Lewinden does this for a living.

01:23
Daniel Scharff
They are one of the best known law firms in this industry. If you want to reach out today's guests, you can reach them at Anthony G.L. Law us or Ryan at R. Hallaw us. Those are both in the show notes or you can just go to their overall website, GL Law Us. All right everybody, enjoy. All right, welcome to the podcast everybody. This is going to be a life saving episode for a lot of you out there. This topic around co man agreements, supply, distribution, this stuff can absolutely save your behind. If you just have a much better framework going into some of these agreements. It can save you from signing into some terms that could really screw you or just not having clarity when things go wrong, who has what kind of responsibility.

02:13
Daniel Scharff
So I'm really excited to have just a couple of the absolute experts in the industry here to explain it to all of us. So maybe we could start just with a quick intro overview. Maybe Anthony, if you wouldn't mind starting, just tell us a little bit about yourself as well as what your law firm does.

02:29
Anthony Iuzzolino
Yeah, that sounds great. And first, Daniel, thank you so much for having us. It's an honor and a privilege and I love everything that you do for the CPG community. It's amazing.

02:37
Daniel Scharff
Thank you.

02:38
Anthony Iuzzolino
Yeah, so we have a boutique law firm. We're based in New York City. We have about 25 attorneys, and all we do is represent CPG brands, mostly founder led ventures. And for those brands, we kind of act as lifecycle counsel. So anything you can think of that a brand encounters before it's even a brand, before it's, you know, a company, when it's just kind of an idea that a potential founder has through exit will kind of help them navigate those issues. Typically they fall within three buckets. It'll be kind of financing and corporate governance. Then there's everyday blocking and tackling. And that'll kind of touch on what we're going to talk about today in terms of OPS agreements. But it goes beyond that. It's employment agreements, NDAs, influencer agreements, all that good stuff.

03:25
Anthony Iuzzolino
And we do everything with an eye toward total optionality at the end. So whether you want to sell your business, whether you want to stick around forever, or whether you want to do a strategic venture, our goal is to set up these agreements so you're never caught off guard and you can do exactly what you want to do when you're ready to do it. Personally, I've been with the firm since 2011, since inception, and before then I was with the two founding partners, Nick and Ryan. So I feel really old right now, but I still think I look pretty good.

03:57
Daniel Scharff
On one of the earlier podcasts we did with a couple of your partners, Gabby mentioned that for her classmates from law school, they look at her as the one who does the fun kind of law. What do you think? Do your friends think that about you also?

04:09
Anthony Iuzzolino
I think they do. I think they're like, I think they refer to it as snack law, which I love. And I started off doing real estate for the first year or so after law school, and I can unequivocally confirm that this is a lot better than being a real estate attorney.

04:27
Daniel Scharff
All right. Okay, Anthony, thank you for that great intro. Ryan, I'm going to come over to you and maybe also because I know Luyen does all kinds of stuff like you're mentioning total life cycle for getting brands started even before there's anything to helping them structure raises and all the way out to exiting. But since we're focused today specifically on some of these ops contracts, maybe you could introduce yourself, Ryan, but then also go into that a little bit like what kind of ops contracts would you guys even be helping people with? Or what do CPG companies typically encounter just to kick us off here?

05:01
Ryan Hall
Yep. So my name is Ryan Hall. I have also similarly been with the firm for quite a while. I joined straight out of law school back in 2014. And so I've been doing this for this point over a decade and literally my entire career. I did not have a one year of real estate experience prior to this. I've been snack cloth my whole life. So yeah, this is basically pretty much what everyone at the firm does. Nothing but this. So we have a lot of experience on other things. So touching into that one segment of the life cycle that Anthony was referring to, really looking at what type of agreements are going to be put in place for the OPS perspective. And so I really think of this typically, as in a CPG world, there's really two stages of the OPS business, right?

05:47
Ryan Hall
It's first of all, you need to create your product in some capacity. And then once the product has been created, then you're looking at how do we get it to the customer, how do we get it to market, how do we sell it? And so on the first side of things, we start off with there's not a product in existence. We're starting off with something, right? We're starting off with some type of protein or some type of grain or beverage or you know, what are the ingredients coming in. And so a lot of times we'll be looking at putting together supply agreements for those raw materials or packaging or the things that are what's ultimately going to comprise the finished product. And so that's just sourcing those things typically.

06:24
Ryan Hall
And then once you actually get those created, then we're looking at co packing agreements, right? That's probably the biggest one here that we'll touch on today. There's a lot of detail and everyone's very appropriately so very focused on making sure that, hey, the step where we're actually creating the product that is the basis of our entire business, that's going to be have all the correct terms with all the protections and everything like that. Then you know, once we have the finished product created, at that point it's time to let's how do we get it to market? And so there's a whole path of, you know, there's multiple different ways that it can happen. But I would say typically you start off with what do we do with all this? You know, we just made 10,000 of these, what do we do with them?

07:02
Ryan Hall
And so usually we'll look at a 3 PL agreement for warehousing and fulfillment services at that point. Then it's got to go to the next stage start how do we get it on trucks to wherever the customer is. And so distribution is a big point of that. There's a lot of different types of distribution, types of distributors that do different routes of fulfillment. But you know, it's someone taking your product and getting to a retailer or customer. And then I'd say the other big category we see a lot is for broker goods as well. And that's something that. The biggest point is that they help getting those new relationships that are really the engine of growth for CPG business.

07:37
Daniel Scharff
All right, that's very helpful and I'm excited to dig into a bunch of those. Anthony, when you talk to a lot of CPG brands, like, what state are they in typically with these agreements, when they come to you maybe sign some and they're bad agreements, they shouldn't have signed them that way. Or they don't even have agreements and they're just kind of going off handshake or trust type stuff. And like, you know, why is it really important to get these agreements done the right way early on?

08:05
Anthony Iuzzolino
Yeah, I mean, companies are in all different positions when they come to us. Some have agreements, some don't. And frankly, sometimes it's better not to have an agreement than to have a really bad one. But getting an agreement in place is really important. I think you touched on this earlier, Daniel. It's the backbone of your company. I mean, what do you do? You sell a product. So you need agreements in place to define the relationship of the person who makes your product, who then gets your product out to the customer. And you know, 99% of our clients don't actually make their product. They have a co packer, they rely on suppliers. They're not self manufacturing, they're not necessarily vertically integrated. So these relationships have added importance. And having an agreement in place allows you to kind of set expectations.

08:56
Anthony Iuzzolino
And when things aren't going right, you have something that you can point to and say, this is how it should play out. And I think that creates more certainty for you as a founder, more certainty for the business. And certainly at the end of your life cycle when you might be evaluating a strategic transaction, there's just a level of confidence that your acquirer or whoever it is has about your business and its path forward. So I think it's just as important as kind of a lot of focus gets put on financing and fundraising and that type of stuff. But I think these agreements are really fundamental for the health and wellness of your business.

09:33
Daniel Scharff
Yeah, pretty interesting to me having been through this process as well. First, you know, my Instinct would always to be like, yeah, I mean you need these agreements. But actually the thing that matters most is your relationship with the coman because there are things that you might sign that might be enforceable through a contract that they might not enforce because you have a good relationship with them about, you know, being able to change your production date at the last minute and they're like, yeah, okay, that's cool, like we'll help you. But it actually can really help that relationship also just to have everything really clearly defined because then there are not unknowns. And I also think I just was really nervous to feel like I was burdening the coman with a lot of terms, a lot of clauses.

10:12
Daniel Scharff
And like by the way, here are all the specs for the product. We want you to test this and this. Actually they always responded really well to all of that kind of stuff. Like if you are a good coman and you know what you're doing, you're totally okay being measured and given process. That's just what you do for a living. So I, the deeper went into, you know, more specifications and everything, I felt like really helped improve the overall relationship and like having a good final product, which is what everybody actually wants, right? Everybody wants it to go well. So okay Ryan, let's start getting into it. Let's start with this coman and supply type agreements. Can you just take us through maybe what are some of the key elements here, the most important clauses, things you really need to nail down.

10:53
Ryan Hall
Yeah. So I want touch on a point you just mentioned about how there are a number of co packer agreements that the arrangement is that we go through the process of negotiating the agreement and then ultimately the parties take this agreement and stick it in a drawer and never look at it again. And they operate on a very, you know, cordial and reasonable basis that hey, we're partners now and we're going to work the right. And on the other hand we also see co manufacturers who literally look at it every single day and make sure that they know every single right in there and they're applying with everything in there. And so I would say a very important thing as an early on stage looking at these things as well is you startup CPG has such a great community.

11:34
Ryan Hall
I would give a shout out to your Slack community. You know there's a lot of different types of co hackers out there. So ask the community, use the resources around you and see, hey, what has people's experience has been with these parties before. And I think that'll help go a long way towards knowing who you're getting in bed with essentially.

11:50
Daniel Scharff
That's a good tip. There are a couple that people will be very vocal about either way. A couple that are not favorites and a couple that are. So I like that tip a lot.

11:59
Ryan Hall
Yeah. So then the actual terms that we're looking at. So there's quite a few actually. It's really oftentimes not super simple agreements but the first one is probably pricing structure. Right. Are we going to do a tolling fee or turnkey approach to this? You know, how are pricing adjustments going to be made that can really become very important over the long term Relationship.

12:19
Daniel Scharff
Of your product development and tolling fee meaning basically we're just going to charge you a certain amount for basically our overhead and running versus you know, turnkey would be kind of what more of like a rental fee and you kind of provide everything?

12:32
Ryan Hall
Yeah, turnkey is all in. There's a couple more details. We'll go into that later too. But yeah, exactly. It's kind of like cost plus structure versus all in. And they're very different relationships overall. You know, more typical things. Payment terms are going to be important whether or not you're looking at a minimum volume requirements or capacity commitment. Right. So on the brand side are you going to be required to purchase a certain minimum amount every year and on the co packer side are they going to be guaranteeing a certain level of capacity? Right, right. So a lot of these agreements that we're thinking about, just like the pricing adjustments, it's not just about what the next 12 months is going to look like at the next 24 months is going to look like. How can this agreement grow with the brand?

13:11
Ryan Hall
Can this be the partner that takes us? Hey, Ideally we have 10x revenue in 5 years. Is this partner going to be someone or is this agreement going to be a basis that'll allow us to do that? So another big thing to handle that is on volume forecast, making sure that everyone's on the same page about where we're going, whether or not there's going to be binding or non binding, you know, handling the raw materials and the ingredients. So we just talked about maybe potentially having supply agreements and bringing those in. Sometimes the co packer handles everything and that would typically be something along the lines of a turnkey approach. Right. You say we want this finished product and they go handle everything for you. Whereas otherwise if you're supplying everything then there's going to be a lot of things about.

13:52
Ryan Hall
Are they inspecting things for you beyond that, you know, quality is always a big one too. You want to make sure, hey, we're paying you all this money, are we going to get finished products that we can actually go out and sell into the world? And if not, if there's issues, how are those going to be handled? That's always some of the biggest things that we have to deal with sometimes is just, okay, something went wrong, maybe someone's at fault, maybe something's not at fault, someone's always at fault. But like who is it necessarily and how are we going to handle those? How are we going to handle potential recall situations? I think shipping is very important too. Another big one is around ip. I got to make sure if we're doing something commodity based, not a huge deal.

14:29
Ryan Hall
If you have a brand new product that you've developed something, got to make sure that the co backer is not taking anything away from that. Are there any specific manufacturing processes that are involved here and who's going to own that if that's the case? And then beyond that, exclusivity, non compete, same thing. Is this going to be something that they can go work with your competitor? Is that something you were concerned about? That, hey, they have all this, you know, they've dialed in all the specs and special terms and everything here. I don't really feel comfortable with them giving that exact same hard work and information potentially even if not directly. Now they know how to do everything. It's going to give a leg up to the competitor coming to work with them.

15:06
Ryan Hall
And then I'd say the last one is just term again, kind of looking at long term. How long is this relationship going to go? Is this something that they can get out relatively quickly? We're potentially going to be left high and dry if we can't agree to pricing adjustments. Or is this something that we have the ability to keep on renewing and make sure that we have a stable source of manufacturing. So that's a little overview. Like I said, there's a lot of details in all of these and so those are the big points. But we could spend a lot of time talking about each individual one of them. So I think we're going touch on just a few of these in particular a little bit more.

15:39
Daniel Scharff
Yeah, I like that overview. And I think it also kind of assumes in this case that they're not the ones creating the product for you, which you can have. Some comans will be like, yeah, we'll do the formulation for you. And then I don't know Maybe there are other issues, like do they own the formulation or can you port it over to another CO man? But let's say we're not talking about that exactly today. But I think the overall causes that you mentioned, like, really do impact a lot of the things that you're going to need clarity on when you talk to CO man or the things that can kind of go wrong because you all of a sudden your forecast was too aggressive and you need to now change the quantity.

16:12
Daniel Scharff
Well, like it should be in there and you should know what happens if you actually are only going to order a third of the cans over the year that you were telling them that you were going to order. Okay, like, yeah, what is the impact then on pricing? Or if you need to change the timing of a run? And like, usually they'll have rules about, hey, you need to lock in an order like two months ahead of time. And I mean, hopefully they can accommodate if you need to switch something at the last minute, because that also really can happen and it may not be your fault.

16:37
Daniel Scharff
It may be that the ingredient that you ordered that was promised to arrive didn't actually arrive or it did arrive and then there was a problem with it and it was expired or something, which can really disrupt your entire schedule and like the quality issues that you can have coming out. And is it actually within the spec or do you need to actually do something about it because it's outside of the spec and you can't print that product and like, you know, have it run in the market and then just a lot of other stuff, like what are they going to do with all the materials that you have there? What about after they run and you have some leftover stuff?

17:05
Daniel Scharff
So I just, I love the idea of really knowing how to get all of that stuff to on focus find ahead of time, which I think is really the best thing for all parties if you can. So one question that comes up a lot from people is I think especially newer founders get very jittery about their idea and their IP and everything. Like, what kind of things should you actually try to protect? Like what IP protections should be in the agreement versus what would you not really worry about?

17:33
Anthony Iuzzolino
Yeah. So I mean, from my perspective, IP protection is fundamental and it's something that you really do want to have clarity around with your coman. So I think there's generally two scenarios. One is you bring your formulation or your recipe to your coman and they produce it. The other one is that they help you formulate and in either case you really want Language in there saying that you own the formulation whether you bring it or they help you develop it. And even if you bring the formulation, there's inevitably going to be tweaks, nip and tucks and changes to it. Who owns those changes. And again, it's really important to define ownership and document. So I think a lot of times our clients come in with the impression that because you pay the co man, you own everything they produce for you.

18:22
Anthony Iuzzolino
In terms of ip, that's not necessarily the default rule. So really what you want to have in your agreements is language addressing ownership. And I guess you can refer to it as work made for hire language. Right? So anything they do, the proceeds and the results of their services is essentially IP of the company. Now there are nuances to that. For example, if the manufacturer has a proprietary process that they help incorporate or use to produce your product, don't necessarily own the manufacturer's proprietary process, but maybe you own everything else outside of that. And the idea is when you go later on, because we talk about total optionality and the ability to sell your company later, if you go to sell your company and you don't own your formulation, then what are you actually selling?

19:09
Anthony Iuzzolino
Because you can't produce your product elsewhere because that co man has the rights to your product or at least a formulation to produce your product. So it is really important to get that done and get that kind of addressed early on. Typically it's not an issue. I think there's certainly back and forth in terms of maybe carving out some proprietary aspects that the co men may bring that they don't want to necessarily transfer to you. But most command are reasonable in terms of recognizing that the name of the game for a brand is to own the recipe and the formulation so that they can potentially later exit.

19:45
Daniel Scharff
So Anthony, okay, let's say you're a new brand. You probably are not sitting on a contract template for supply agreement that you would be like, great, we want to work with you as a co man and here is the agreement we expect from you guys. I would say probably more often the co main will be like, great, okay, here's our agreement. And I'm sure you see a lot of those like, is the coman often writing it very much in their favor of like, and we own this formula and you can't take it anywhere ever. And if you do, you're going to owe us a lot of money. And by the way, we're not responsible for everything. Like, do they usually start pretty reasonable and you just have to like, kind of tweak some of them.

20:17
Daniel Scharff
What should brands expect if a coman sends over their contract template?

20:21
Anthony Iuzzolino
It's funny you mentioned that. It's almost like all bets are off depending on the co man because co men are great at producing things except for contracts. So they're all over the place. I literally working with a client on their co man agreement and we ended up getting a pretty favorable agreement to the client, to the brand and then I ended up working with the co man on another agreement with another client and they use that form for the other client. I was thinking to myself, so why the heck would you do that? That's definitely not in your interest to do so. It kind of runs the spectrum in terms of what type of agreement you'll get from the co man.

20:57
Anthony Iuzzolino
I do think that more sophisticated co men tend to have agreements that are a bit more onerous and I think there's an influx of sophistication coming into the co man space, especially with private equity tending to invest in the co man space now. So I think that just emphasizes the need for a review. Though I still rarely see a coman trying to claim total ownership in a recipe and formulation is kind of like the default stance. I think they tend to be pretty reasonable in terms of what is owned by the brand and what not and what is not owned by the brand. But every coman is different, so that's why you need some stellar legal counsel.

21:36
Daniel Scharff
And Anthony, what are those things that you think made it actually favorable for the brand? Was it around just optionality, the things that they could kind of wiggle out of if they needed to, or just the ownership of things like what do you think is really a win for a brand when they're negotiating that in.

21:51
Anthony Iuzzolino
Terms of IP or more generally.

21:54
Daniel Scharff
Across the board, like a contract where you're like that's a good contract for a brand because you got all the clarity or are there specific clauses where you'd be like, yeah, if you can get that.

22:01
Anthony Iuzzolino
Honestly, our goal isn't to create a one sided contract, it's to create a fair contract because we think that kind of just works best for the overall relationship. So if we can start with a contract where certain provisions, for example, are mutual, like confidentiality and indemnification, where there's reasonable language regarding IP where you own what you bring to the coman and enhancements they might make to that, but maybe they'll own their proprietary manufacturing processes and give you a license to use them. The ability to assign the agreement later on when you go to sell your business, those types of things, if they are in there, they shouldn't be all that controversial. You know, that puts you in a good spot. Things that I don't like that sometimes are in.

22:43
Anthony Iuzzolino
There are limitations on liability where a co man will say, okay, well you know, if we mess up your product and someone gets injured, God forbid, your cap, the purchase price for the product or something like that, or you know, those types of artificial limitations on liability and disclaiming responsibility for not doing your job, those feel inherently unfair and those are things that we try to negotiate out.

23:09
Daniel Scharff
All right, great answer. Okay, Ryan, let me come back to you. So a big part of this is pricing. I mean we want comands that can make the product the way we want them to spec and high quality and all that stuff. But pricing is such a big consideration, especially these days. All the margin pressure, all the stuff that's out there. How do you think is the fair way to do pricing structure in a way that makes sense to everybody that also gives you incentives for as you grow to try to get the cost down?

23:37
Ryan Hall
Yeah, so I think there's a little bit of going back to that turnkey and tolling situation. It's a little bit of a. How much of a hands on approach and how much of a hands off approach do you want? Because when you start off with, let's say relatively early on, you may not have all the capabilities to go out and get all of your sourcing taken care of, to get all the things that are going in and especially to do it with the volume that may be required. Right. There's a lot of simple things. Just think of something as simple as salt. Your little brand that you may be starting off with doesn't have volume to get really great salt pricing to begin with.

24:13
Ryan Hall
And so if you can instead do a turnkey approach to begin with, then you can start to leverage the economies of scale that the co backer they're buying Salt for their 15 brands that they're probably producing and you get a much lower price for that and that can get passed through to your overall pricing. Instead of you do a tolling approach, you have a little bit more of that control, the direct control and flexibility on what's going in. You can make decisions much more easily of, hey, maybe we want to increase the quality of a given ingredient into our product, or maybe we want to find a cheaper substitute for it, or maybe we just find generally there's a better supplier arrangement.

24:53
Ryan Hall
And with a tolling arrangement, you have the ability to directly take advantage of whatever changes and pricing improvements that result from that. The flip side of that is that you're a lot more exposed to things as well. So I think there's not necessarily quite as much inherent alignment in a tolling approach, right? It's the co backer. They're making products, they're taking the things that you're giving them and they're just processing them. And if they spend a little bit more materials, maybe, you know, it takes £100 of something or £110 of something to make £100 of finished products. Well, it doesn't really matter that much because they're still getting paid the same. On the other hand, if you have a turnkey approach, you are really putting everything, you're creating really great alignment for that, right?

25:37
Ryan Hall
You are saying that, hey, if you can create a hundred pounds of products using only 101 pounds of inputs, then we can maybe share some of the benefits of that. And so you have a manufacturer that's more incentivized to be to doing everything as efficiently as possible and minimize waste and all those things. And so if you have a tolling approach, you are inherently going to be subject or exposed to pricing adjustments that are going to happen, right? Maybe once a year you have a conversation with a manufacturer and say, hey, utility costs went up, right? Well, it's pretty easy to talk about utility changes because that's not just a secret sauce number, right? There's utility rates in the area. They can show you exactly, hey, these are our prices that went up.

26:18
Ryan Hall
And you know, you're not getting it passed through every single month. So it should be easy. Same thing. There's all these indices that will show the cost of labor in the area. And so the conversations are a little bit more simple. Whereas if you have a turnkey approach, then pricing adjustment structures become very important. Right? On one hand it's really great because let's say that one of the ingredients goes up for one month.

26:40
Ryan Hall
Well, if you've agreed with them that prices for your finished products can only change once every six months or once every then eventually the co packer just has to eat that for a little bit and you have a little bit more time to say, hey, we've seen this price go up, but we have a couple more months to start thinking about how can we change the marketing for our pricing changes, how can we get retailers ready to accept these changes. So it gives you just a little bit more cushion to deal with these changes. What it does do, then it creates a little bit more importance of when you do have those conversations, how often can they make these changes? How much of a price change can they make?

27:17
Ryan Hall
So some of those are just making a decision about how much of a risk exposure is each party going to take. And there's not necessarily a one size fits all approach here. I think it's really going to depend upon products, how complicated it is, how complicated the raw material sourcing situation is. And then in addition to that, you know, who are we working with? Right. Is this going back to. If you can get some information about on the day to day basis how these codebackers work, that can really help inform which direction is going to be more helpful for your brand.

27:47
Daniel Scharff
Okay, and let me ask you. So when I had a contract with mycoman, there were some clauses in there. One was around exclusivity. It was like, okay, we want all of your volume for these SKUs so you know, you're signing that and for the SKUs that were starting with them. So it actually didn't even include additional SKUs that we could launch later. But were basically saying, yes, we will give you first. Right. On all orders that we're going to do for this. And we also had volume commitments in there. Is that typical? And you know, is that a good idea to have that kind of stuff in there?

28:18
Ryan Hall
I would say I actually don't see it as the most common outcome. I think there is one place where you'll definitely see it is if there's startup costs involved. Right. If the manufacturer has to make some type of capital commitments, go out and know, retool their manufacturing line or buy some equipment, they're going to make sure that they're protected by locking you in to make sure that they're going to get enough purchases to earn that back. There are ways that you can handle that too, right? You could basically say that maybe there's some type of per unit fee involved until they get paid off or something like that, but that's typically going to be the basis of where these things are coming from. I think they're both a little bit dangerous though. I'm more concerned about volume commitments than I am about exclusivity.

29:02
Ryan Hall
As long as there's not a volume commitment and you have done enough looking into this manufacturer and you know what you're getting yourself into. Look, you may have to only work with them, but at least it can be something that doesn't necessarily have the risk of killing the business until you can get out of the term with the volume commitment though sometimes I've seen this happen. Everyone has very rosy forecasts going forward. Right. We all think that we're going to be the next billion dollar brand. And sometimes you're only the next hundred million dollar brand. And if you go and create volume commitments based upon being a billion dollar brand, there's going to be consequences for that. Right. If you don't hit those volume commitments, manufacturer doesn't just say, hey, no problem, there's typically going to be payments required.

29:44
Ryan Hall
We'll see something called a take or pay concept where you either need to place an additional order to catch up with your volume commitments or you have to make a basically a penalty payment for that missed volume. And in CPG world everyone is always a capital intensive process. There's a lot of different ways that money can be spent. And so it's just throw away money just because you are in a position where the brand is already not getting the volume that you had anticipated. It can be potentially a little bit of a death knell or something close to it. And so I think that you should try to avoid these concepts as much as possible, except to the extent it's just truly necessary to get the manufacturing relationship off the ground.

30:26
Ryan Hall
Because if it doesn't get off the ground, the potentially maybe you just don't even have a business to begin with. And so that's really the only situation that I would recommend getting into that. But it is, you have to do it eyes wide open and be aware of all the risks associated with that.

30:38
Daniel Scharff
I gotcha. Okay, so let's maybe close out this part of the coman discussion. Anthony, what is some horrible stuff you've seen happen on Comand's? I know you've seen a bunch like where has it really gone bad?

30:52
Anthony Iuzzolino
Yeah. So we're just talking about exclusivity and Ryan was saying, well, he might rather be exclusive to one co man than have onerous volume commitments, which I totally get though I've also seen clients who have only had one co man. Maybe there wasn't even exclusivity, but they just didn't have the redundancy in place. And then things happened to that co man. I had one client whose co man's facility caught on fire, which is obviously problematic. And they didn't have supply for I think the better part of six months as a result. And not having supply for six months, it took them years to kind of catch up and regain that momentum. I had another client whose coman literally just went bankrupt like A month ago. So there is risk to having one co man whether or not you're exclusive to it.

31:39
Anthony Iuzzolino
And you know, having redundancy in your supply chain is often a luxury and it's not something that startup companies can manage because they don't necessarily have the volume to spread across or the resources to spread across several manufacturers. But as companies grow and scale, they should look toward potentially having that redundancy. One, to avoid that horror story of the co man catching on fire or going bankrupt. But two, it keeps your partners honest because you kind of compare terms in essence, and your co man knows that they're not your only source of supply. So they don't necessarily have you over a barrel and on payment terms or material pricing and those types of things. So certainly I favor redundancy.

32:25
Anthony Iuzzolino
So if you can get multiple sources of supply or at least have an eye to do that as you grow, that's a big win for a brand. And then, you know, we talked about IP before. I had a brand come to me and they had an agreement in place where they didn't own their formulation and they had gotten to the point of doing a strategic transaction and they could not complete the transaction without getting the co man to essentially assign the formula over 10 million. Later it was assigned and owned by the brand which then, you know, completed the transaction. Luckily you know, it was a big transaction. So 10 million was a bit of a rounding error. But still no one wants to give that away to your coman.

33:05
Anthony Iuzzolino
So that kind of goes to just being aware of the key terms when you're entering into these agreements in the beginning. And a lot of times an ounce of prevention is worth a pound of cure. So I would really be focused on it and not be afraid to ask questions and get help.

33:21
Daniel Scharff
All right, that feels like a good place to move on from co main agreements now that we've just scared everybody sufficiently. So why don't let's assume that you actually navigated those waters successfully and now we're in the area of distribution agreements. So Ryan, maybe you could kick us off and can you just tell us a little bit about distribution agreements in general and some of the key elements and clauses?

33:43
Ryan Hall
Yeah. So distribution agreements as we touched on a little bit earlier, is this is how you're going to get your product to market. Right. Ultimately you have to get the products into customers hands because most of our clients are not people who actually own a bunch of freight trucks all over the country. You got to engage someone to do it for you. And so I think the Biggest thing to be thinking about is what type of routes are we looking for here, what type of distributor are we talking about and where are they going to serve? And so the biggest thing to start off with that really drives a lot of this is what's the territory or market that we're looking at, right? Is it especially in the beverage world, a lot of this is really split out by geographic scope.

34:22
Ryan Hall
So if you got like a DSD distributor, maybe they'll cover all of Oregon and maybe they'll cover specific counties in Oregon. And so in order to fill out a broad blanket of distribution amongst the whole country or wherever you're trying to go at, you may have to go get another distributor to fill in the cracks. And so that's the biggest thing is are we looking at a geographic scope? Are we looking at maybe certain types of channels? Sometimes looking at only natural or specialty, or maybe looking at only convenience or food service or military. You know, there's specialty distributors who only handle like the military channel.

35:00
Ryan Hall
And so if you're going to ultimately wind up with products being sold to as many people as possible and as many channels as possible, there's going to be a lot of distribution agreements that you have to enter into. And it's very important to make sure that the territory and market scopes are not overlapping. And so another bitcoin is around, is it going to be exclusive or non exclusive? If it's exclusive, then it becomes a lot more important to make sure that hey, no other distribution agreement is potentially going to involve products coming into this for scope of products as well. Is this going to cover all of our products that we're currently selling? Is this going to cover new products? Potentially. If we decide to introduce a new size of a product, is that going to automatically get captured?

35:43
Ryan Hall
Or maybe is there another distributor who would be a better alternative for that? What about if it's a completely new brand?

35:49
Anthony Iuzzolino
Right.

35:50
Ryan Hall
Sometimes founders are often people who have a lot of ideas and despite spending 18 hours a day one brand, they may still have ideas for what are we doing next. And so the question is, all these agreements that you agree to with everyone, is this going to capture that or not? Big thing too to talk about is around termination and how long is a term going to go for the agreement and what's the termination situation going to look like? As usual with all these agreements, pricing and payment terms and pricing adjustments are always going to be important as well. Same thing as well. With minimum purchase or sales targets, are there consequences for, hey, you have to go out and sell a certain amount or there's consequences a big one.

36:30
Ryan Hall
You know, distributors are really going to be in some ways a little bit of your, the face of your brand out in the market. And so a lot of what these agreements cover and talk about too is what are the marketing and promotion obligations? Are they going to have to come in and be our partner? Are they we're going to share costs 5050 on promotions, how are we going to handle slotting fees? Are they going to have personnel in the market who are going door to door and like rearranging everything for you? Those are probably the biggest ones. I guess one other one is non compete too, right? Sometimes don't really love. Hey look, if we want you selling our water brand, are we comfortable with your same trucks carrying our direct competitors water brand as well?

37:08
Ryan Hall
Because are you actually going to be focusing on selling us to the best of your ability if that's the case? You know, distributors are in the market of selling as many products as possible. So they're usually a little bit hesitant for that. But ideally we'd like to make sure that people are focused on your product as much as possible.

37:24
Daniel Scharff
Okay, that makes sense. And I think maybe a lot of brands out there, they might start with let's say a broad liner distributor, maybe UNFI or khi and you know, a lot of that stuff may not come into play with them because typically they're not going to ask you for an exclusive territory. Like they're really more about oh, you want to get your product to these retailers. Well we serve all the major retailers, we can do all that and obviously have contracts with them as well. But you know, things like territory rights. But that definitely does come into play when you're looking to build out your DSD network, your direct store delivery network and you're trying to figure out how am I really going to crush this one market.

38:00
Daniel Scharff
Well, I go with these specialists and you know, obviously difference being dsds actually put your product like on the shelf, do it, you know, let's say more like full service but also it can be a little bit more expensive but they can really own a territory. And so you know, when I've gone through that contract, I would say it is maybe one of those scenarios where probably if you take their contract template it's going to be very favorable to them for where it actually starts out. Right. And it's going to say like we absolutely have complete territorial rights over this whole territory. If we even sniff another distributor, we you know, get to absolutely like own Your company and you know I'm exaggerating obviously. And the termination rights that they propose can also be very tough for an early brand.

38:44
Daniel Scharff
Like if you ever want to leave us then you must pay us five full years of revenue or you know, something like really difficult for a brand. And where do you typically see that stuff start to where you think brands are able to kind of negotiate stuff?

39:01
Ryan Hall
Yeah, I think there's definitely a lot more of a battle on the distribution side of things that co backers for co packers. As Anthony mentioned, we know we're typically getting something that's along the line of fare. I think for distributors we are getting something to your point that is absolutely sometimes a little bit absurd that there's something's being proposed. There's what I would call market terms for some of these things. Like we'll talk about termination payments in a second. We will get proposals that are 3x or 4x, what a market standard would be or 10x or something like that. It's a little bit crazy. So I think the biggest things that you're probably going to be focused on battling with of these I would say probably looking at, I think termination rights is going to be the biggest one.

39:47
Ryan Hall
You know, it's usually you are getting whatever you're getting with respect to exclusive or non exclusive appointments and what territory you're getting. Those are things that are not super negotiable. It's just that's the business that they're running. If that's what you sign up for, then that's what you're signing up. But in terms of the consequences of deviating from that, of not respected, maybe breaching the agreement in some capacity or potentially looking at an early termination, that's where there's usually going to be some wiggle room. I think our firm has basically done agreements with almost every single distributor out there in the country at this point. And so we usually have a good reference point of hey, does this distributor have room for negotiation?

40:30
Ryan Hall
Or it doesn't matter if you had 10x the revenue and you're the biggest player in the space, they're just not going to accept anything different. And so I think it is helpful to utilize community, utilize good advisors. We don't spend a bunch of time fighting for things that you can't get. Probably the things that you're typically trying to push on most.

40:49
Daniel Scharff
Yeah, and I've talked to a lot of people who have negotiated these things and I've negotiated some of them and yeah, you can get some ridiculous proposals coming in but just some stuff that feels very difficult to negotiate also. Like, hey, we want this whole territory. Maybe you've already opened up some nice retail chains and now you want a nice DSD in the area. And they're like, great, we want everything to work with us. You must give us those stores. In some instances, the DSDs are actually not that good in some of the chains. And the buyer might even tell you that, like, yeah, that we don't like working with them for these stores. They do not cover us well. They don't give us good service.

41:24
Daniel Scharff
If you don't have that in the contract where maybe you've done a carve out, as they call it, just giving yourself some kind of option with them, then it can be tricky and maybe that buyer is not going to want to work with you in that instance. But I've seen people get pretty creative around that kind of stuff where maybe they're like, okay, we either can just carve out these retailers, maybe the stuff that we've already gotten, which I don't know, maybe the DSD doesn't want to work with you though, if you're not bringing them a lot of business, you know, so you kind of have to talk about that with them.

41:52
Daniel Scharff
But then also I've seen things like, okay, if we don't go with you for some accounts, then maybe we'll give you a small payment based off that kind of invasion fee, I think they call it, to service their territory with somebody else. And then also it can be a little complicated. Also if you have a national retailer or a big regional retailer and then they just have some stores that's in one of your territories with another dsd and they're like, look, the DSD would love it. They're like, yeah, we want to serve sad national retailer. We want that volume. National retailer is like, hell no. I don't want some other distributor just servicing like four of my stores. Like, we're not going to do that with you.

42:29
Daniel Scharff
So I think just, you know, having that, those templates to go up and knowing what stuff to ask for at the onset, you might get pushback. I don't know. You'll learn pretty quickly what's important to them and what's important to you. Right? Does that. Anthony, what do you think? Does that sound reasonable?

42:41
Anthony Iuzzolino
Yeah, it sounds reasonable. And I think you bring up a great point regarding the invasion fee. That's one way to give yourself optionality. There's also the concept of putting a purchase commitment in there. Now if they can't grow your business by a certain percentage every year. Maybe you shouldn't be tethered to them forever. So that's another thing to consider putting in these agreements. I will say that a lot of our clients do have success using kind of a client driven template, at least as a starting point to negotiate these agreements. And really the benefit of doing that is that you kind of have everything in one place that's protective to the brand and fair. And then you just, you can kind of gauge what they push back on instead of trying to think, did I miss something?

43:25
Anthony Iuzzolino
And you know, kind of negotiating the distributor's agreement, did I forget to put this in? Did I forget to put that in? It's kind of easier to work off of your own template. So for a lot of clients, what we'll do is we'll set them up with a form that matches their business and their goals and they use that as kind of the lead with these DSD distributors. And usually there's, you know, at least some willingness to engage in a back and forth. It doesn't mean all the conversations are easy and it doesn't mean you win all the points, but it means that something like an invasion fee, at least you're putting it in there initially. Maybe it gets negotiated out, but you're never like, oh, did I forget to ask for that?

44:02
Daniel Scharff
What is market rate on some of these termination fees? Fees? Like if you're going with a DSD that has a good reputation, what do you think? Because obviously, like they're going to build your brand. They're like, look, we are awesome at this. We deliver to every single point of distribution that you want because of those relationships we are just going to absolutely crush with your product. We're going to get it into all of these points of distribution. You don't get to just take that from us and leave and go somewhere else. Right? Like if we build that, you know, you're going to want some kind of compensation if you then sell the brand and go to a national like a big CPG that's going to take over the distribution from us.

44:37
Daniel Scharff
So I think it, like, it makes sense why they asked you for some kind of a termination clause. But like, what do you think is reasonable in some different scenarios for them to like, yeah, ask for like, you know, three to five years of like the overall revenue they would make for each one or profit or what do you think is within the realm of possible or reasonable?

44:58
Anthony Iuzzolino
I mean, I'd like to see it no more than two years of gross profit. Ryan, I consider you The DSD expert. So you can fact check me on that one. But I think two years would be reasonable.

45:10
Ryan Hall
I think there's been a trend upwards over the course of my career. I feel like it used to be lower. We used to see one year as really kind of the standard. And I think what's happened is slowly you hear stories about people pushing for a little bit higher and the distributors say, well, why shouldn't I get that too? And then there's just been a slow increase. When you're looking at this, you're looking at, hey, I need to sell more products to grow my brand. And this is a distributor who's telling me they're going to do a great job.

45:42
Ryan Hall
And so you look at the option of, okay, I can either go and start this relationship and sell right now and potentially deal with a termination payment down the road, or it can not sell and I just don't have a business to sell anymore down the road. I think in some ways, because it is a future problem, maybe there's a little bit more just willingness to accept higher numbers. And so I think there are definitely you can get one X. There are a lot of distributors who still only require that. And there are distributors require more than 2x. Right. 3x is not an unheard of thing. Sometimes we'll see in like tier structures, maybe even a 4 or 5x, which is tough to swallow. Right.

46:20
Ryan Hall
Because at some point if it gets so high, it becomes a question of is this volume actually worth anything when down the road I'm going to be giving up such a big portion of it to just pay this termination payment in connection with sales. But I would say 2x is you're not. Shouldn't be losing sleep about 2x. That seems to be about on average where the market's at right now.

46:40
Daniel Scharff
Okay, 2x profit.

46:42
Anthony Iuzzolino
I think the one thing I was going to add is there's termination of a distributor when you're still kind of growing your business. And that's tough on the bottom line of the company, especially when the company is still trying to fund other parts of its operations. And then there's termination of your distributor network maybe in connection with sale to a strategic. And that could look potentially a little bit different in terms of just how a brand handles that. And I think one thing to be cognizant of is you want to have your distribution agreements assignable. So when you sell your business, whoever buys you can assume those distribution agreements. And then if they want to terminate those distributors and integrate them maybe into their own Distribution network.

47:26
Anthony Iuzzolino
That might not necessarily be something that a company bears the cost of, but that's something that the acquirer bears the cost of because that's something that they want to do, not something that the business necessarily needs. So it's just another thing to think about when you're entering into these clauses that it could be an expense to the company, but it could also be an expense that you can defer or pass on to someone who buys your business if they're looking to change out your distribution network later on.

47:53
Ryan Hall
Just to be clear though, an acquirer usually is going to take that into account when determining their purchase price. So yes, they will take on the obligation to pay for it, but they may net that out of the purchase price that they're paying sometimes, not always, but it's always at least a factor to consider. But yeah, I think I agree that's the most common situation. It is a regular occurrence though, that I have a client coming to me complaining about some distributor and saying, can we take a look at the contract to see how we can get out of this? Because we're not happy with our performance and they're holding back our growth in some capacity. So it's definitely more harmful or tough scenario to go through.

48:29
Ryan Hall
But it is the reality that if you've got a hundred distributors, at least a couple of them are just not going to be doing as great of a job as you would like them to. Probably.

48:37
Daniel Scharff
Yeah. I like the idea of people thinking about it almost from like a paranoid catch and kill type scenario of like, what if they just do this to slow us down? Like, okay, we need to have the provisions where we can actually at least talk about it. Like, if they're not hitting the growth numbers in general. My feeling is that like, though you really want to like, think more about if it goes well, what are the things that we need to worry about versus, like, if it goes really poorly and both people are unhappy, probably the distributor is not going to want to keep you around regardless. Right. Like, they're busy. They don't want to like deal with you for many years of just like a couple cases a week going on.

49:12
Daniel Scharff
Like, at least the distributors that I've talked to in most cases are going to be like, yeah, you can just go if it's not going well for either one of us, like, may not even enforce a lot of the stuff. Do you see that also or is that just me?

49:23
Ryan Hall
I definitely see that some distributors are very happy to just end the relationship and go their separate ways.

49:29
Anthony Iuzzolino
Yeah.

49:30
Daniel Scharff
And Then, you know, just, let's talk about some horror stories. Also, some of the stuff you guys have seen really go wrong.

49:36
Anthony Iuzzolino
Well, one thing I've definitely seen is clients who have been approached by distributors in other countries and they look at it as, oh, well, I don't really care what's going on. It's going to be free revenue, whatever comes in, and they'll start discussing with the distributor, possible relationship, and before they know it, their trademark is registered in that country by the distributor, and the distributor kind of, you know, has them over a barrel a little bit. So I always caution clients that if you're doing or considering doing business overseas with a distributor, one, you should always have your trademarks registered and your IP protected before you even start those conversations. And then two, kind of the general rules of the road for a DSD agreement, we don't like to see those apply to those international distribution agreements.

50:26
Anthony Iuzzolino
We like to have them much less sticky, you know, terminable upon notice, no buyouts, prepayment for products. So you're not hunting for payment in Australia or wherever, you know, whoever you're dealing with and wherever they are. So that's certainly one thing that I've seen on a number of occasions.

50:44
Daniel Scharff
Any countries where that especially can be tricky. I know, I mean, when I've worked at brands, we've gotten a lot of interest from places like Saudi and. Yeah, like, I think Australia. I've seen a couple. Any markets where you're kind of like, yeah, if you're getting interest from that market, definitely get your trademark registered very quickly.

51:02
Anthony Iuzzolino
It's funny that you asked that question, because I was thinking about that this morning and I was thinking to myself, what's up with those Australians? What are they doing? Because I've had a couple of clients that have had the same thing happen to them with their trademarks when they're dealing with distributors in Australia. I don't know what it is about them.

51:22
Daniel Scharff
Crikey. All right, watch out.

51:25
Anthony Iuzzolino
I just, you know, wherever it is, though, even if it's not in Australia, if it's in, you know, China, the uk, wherever it is, you should have your IP buttoned up because it's just the best practice.

51:35
Daniel Scharff
So, you know, as we're kind of wrapping up here on distribution, obviously you also have to have your product sitting somewhere in order to distributed. So just anything you want to highlight overall about that, about, you know, working with those warehouses, three PLs, like, you know, product sits there, you know, you need to kind of make sure you're not going to be liable or insurance, anything like that. Anthony?

51:54
Anthony Iuzzolino
Yeah, so a typical warehouse agreement, a typical 3 PL agreement is going to disclaim a lot of liability. Essentially, if anything happens to the product that's not caused by failure to act reasonably by the warehouseman or the three pl, for example, a tornado hits the facility and destroys your product, that's going to be your responsibility. So I think those types of agreements drive home the importance for insurance and making sure that you have broad insurance coverage in place that protects the products once it leaves the manufacturer, enters the warehouse, and then is on its way to the retailer. And other thing our clients struggle with is finding a good warehouse and a good 3 PL partner.

52:40
Anthony Iuzzolino
And frankly, once they find someone who can deliver on performance, you know, we'll help them navigate the commercial terms just to make sure that they make sense for the client. It's hard enough to find a good partner. So once they find it, they usually hand us the contract and say, make sure it's okay and we're protected. And typically it's always the same type of issues, the limitations of liability, is there enough insurance in place, that type of stuff. And it's. These are things that we typically navigate. And they never really hold up doing kind of a deal with one of these partners. It's just something that the client should be aware of.

53:12
Daniel Scharff
Nothing like thinking through all the stuff that can go wrong and to really just kind of turn your stomach. Right. I mean, when I was running a brand, that was the thing that faster than anything else could just ruin my week. Like all of a sudden, yeah, lightning strikes somewhere and you're out of inventory. Like, what can you do? Because, yeah, especially when you're a growing brand. It's not like you have so many risk mitigation things in place, so much diversification. Like, typically, there's not a lot of duplication in your supply chain. You've got one supplier for most of your ingredients, and you're relying on the timing that they tell you. And probably you're just in one, maybe two warehouses and you've got your one manufacturing partner and it's just fragile and something can go way wrong.

53:55
Daniel Scharff
And, and even if there's a contract in there that says, like, well, I ordered that ingredient, you didn't deliver it to me, so now you owe me that, it's still, you're the one responsible for your overall supply chain, and that could prevent you from being able to produce your overall product. And that's not going to be the fault of the one person who didn't give you that one key ingredient that you can't make the whole thing without. They're just responsible for kind of their part. So it's. I like the idea of just trying to button up as much of this as you can, but also just being very vigilant because that's what it takes. Right. When we're talking about physical products that have a lot of different people involved.

54:30
Daniel Scharff
So good that people will know about you guys to help them, basically, is what I'm saying. So just kind of, as we wrap up here, Anthony, any overall thoughts that you have about legal mistakes that you're seeing from early brands? A lot in their overall contracts for.

54:45
Anthony Iuzzolino
Ops, I guess I would say that, you know, we have clients that rush to sign and they want to sign right away, and they don't necessarily pay attention to all the terms or frankly, whether not signing a contract and living in the state of nature is potentially better in the short run. So we're big advocates for negotiating and getting a good contract in place. You know, sometimes might not make sense to negotiate an entire contract right now or for a client to sign what's just presented to them. Maybe it has these limitations of liabilities in it that are artificial and actually worse than not signing anything. Maybe the IP language is worse than not having anything in place at all. So I would just caution brands to really be vigilant in what they sign, not rush to sign anything and really think it through.

55:33
Anthony Iuzzolino
Because again, I think signing a bad contract is a lot worse than not signing anything at all.

55:38
Daniel Scharff
All right, Ryan, back to you. Maybe just to wrap up here. So what if you are in one of these bad situations? You're like, I did sign it. It's not great. And we just kind of live in that world. What do you do if you're a brand in that point and maybe you're sitting on some bad contracts or stuff that is just really going to prevent you from growing the way that you would like to? Is there something that you can do about it? Can you revisit those or try to renegotiate?

56:01
Ryan Hall
Yeah. So it does depend a little bit upon how strict some of those requirements are. I think that's why Anthony's point. It is so important to make sure that a lot of these details are ironed out. Because if the agreement is relatively loose, you sign an agreement, but it's a bad agreement and let's say, maybe it's exclusive and there's not really any hard requirements for them for the. The counterparty. They just have to generally do the service. And it doesn't talk about how well they have to do it or how timely they have to do it or anything like that. You are going to have a hard time pointing to an issue. And so I think it's part of the reason why it's so crucial to make sure that the agreement is clear about what we're going to require.

56:47
Ryan Hall
What's going to be considered an issue, you know, be very clear around specifications. If you're a co packer to say, hey, one of the most common things we see is that we our idea of a product is this, and they're producing something different. And if your specifications don't actually say that or don't align with what you had as an idea, it's kind of hard to say that they're not doing what they're supposed to be doing under that. And so that goes to the point of, okay, well, what is the term and what does the exclusivity look like?

57:15
Ryan Hall
Because if you're locked into a term and it's an exclusive term, and there's not really any hard requirements in a contract that they're breaching, then your best bet may honestly just be to wait for a year or two or however long it is until the agreement ends. And that is not a very fun situation to be in. I have seen it happen multiple times. And the last six to 12 months, you start getting an agreement worked up with whoever's going to replace them. But otherwise, if you have the ability to, hey, this is not exclusive, maybe we can go start talking to someone, or we don't necessarily need to buy a certain amount. Well, maybe you can start buying from an alternative supplier.

57:52
Ryan Hall
Or there's a requirement that they have to be doing things in accordance with certain specs, in accordance with certain quality requirements, and they're not hitting those, then this can be a breach situation. Right? Get a lawyer to send a letter saying you're in breach, and if you don't fix this in 30 days, the contract's over. And so there's definitely, ideally, things that either don't bind you to the contract 100% or issues that the manufacturer is happening or whoever the counterparty is that you can point to. And if so, talk to an attorney, talk about what we can do as next steps to take advantage of that. And without that, sometimes it's really just living in the bet that you made and trying to wait it out until we can move on to something else at the end of the contract term.

58:35
Daniel Scharff
All right, great advice, gentlemen. As we wrap up here, any words that you can leave everybody with, hopefully include. Also, if people want to follow up with you guys and the Genuzi Linden team, what's the best way for them to do that? With you guys or just the company as a whole? Anthony, you want to close us out here?

58:52
Anthony Iuzzolino
Yeah, absolutely. So if you're in need of legal help, you feel free to reach out to us. We'd love to talk to you all. You can email me at Anthony lllaw us or Ryan @rhallaw us. You can check out our website at gllaw us and our Instagram.

59:11
Daniel Scharff
I love it when lawyers are on the ig.

59:16
Ryan Hall
Sometimes quite a bit.

59:18
Daniel Scharff
Yeah. What are we going to find there? Some good memes maybe.

59:21
Ryan Hall
You know, we probably need to get a social media intern to just keep us fluent with Gen Z on this.

59:29
Daniel Scharff
Let's make sure they get a good contract. All right?

59:33
Ryan Hall
All right.

59:33
Daniel Scharff
Thank you, Ryan. Thank you so much, Anthony as well. These are some of my favorite kinds of podcasts to do where hopefully a lot of brands will get help from lawyers to make sure that they have a good contract and or ask them the slack get some help from people who have done this kind of stuff before. But if they're not going to, I think this podcast will also help them a lot just to even understand the categories of things that they should be asking about. Because the co mans know about all this stuff. They've done it in contracts before you as a new founder, haven't. And so if you don't know to ask about it probably can only hurt you. So a lot of protections and just ways to keep the overall relationship better.

01:00:12
Daniel Scharff
And you know, we talked at the beginning about like, yeah, all of this stuff can protect you legally, but it also can preserve the relationship that you can have with your co man, which is really what you want and the key to, I think, having a successful growing partnership. So it's just really nice when everything is clear and everyone understands what happens if things go well and if things don't and just general kind of order and operations of things. So thank you both so much. We really appreciate it and I hope everybody really has enjoyed the episode and all learning as much as I have. All right, everybody, thank you so much for listening to our podcast. If you loved it, I would so appreciate it if you could leave us a review. You could do it right now.

01:00:52
Daniel Scharff
If you're an Apple podcast, you can scroll to the bottom of our Startup CPG podcast page and click on write a review. Leave your company name in there. I will try to read it out. If you're in Spotify, you can click on about and then the Star Rating icon. If you are a service provider that would like to appear on the Startup CPG podcast, you can email us at partnershipsartupcpg.com lastly, if you found yourself grooving along to the music It Is My Band, you can visit our website and listen to more. It is super fantastics.com thank you everybody. See you next time.