How can I sell chocolate online?
updated by @tet-kay: 04/09/15 09:10:33AM
Tet - the licenses and permits you need will depend on exactly what you want to do, and where you want to do it. Each States has its own requirements. Here's my 2:
1) I'm happy to offer you my opinions, but these types of questions really need to be addressed to your lawyer. If you don't have one get one.You'll want one with experience in new business startups, preferably in the food sector.
2) In most states there are licensing/permit requirements for each stage and/or segment of what you're doing. For example you would need to create a corporate entity with your Sec of State. Then you would get a business license from your county and/or city. Additional permits would depend on whether you are a production facility only, or a retail facility, etc. It can be very difficult to navigate your city's bureaucracy. See #1.
3) If you rent space in a commercial kitchen, you'll save yourself most of the headaches involved in getting health dept approvals, etc because the commercial kitchen will have already done that. But there are other regulations regarding ingredients, preparation, storage, etc. that you'll need to familiarize yourself with.
4) A commercial kitchen will almost certainly insist that you carry $1MM-$2MM worth of insurance. And in my State it's also necessary to get a food handler's permit. Your State may have something like that too, in which case the commercial kitchen will also probably want to see proof of that.
5) If you are MAKING chocolate you may have a problem, because a commercial kitchen is highly unlikely to have the specialty equipment you'll need, and probably will not allow you to bring in your own. You'll want to run that down in advance.
6) If you are not making chocolate, then things will be easier. But if by "chocolates" you are referring to truffles, pralines, etc. then as you know these require specific storage environments. Most commercial kitchens have only walk-in refrigerators and freezers.
7) For off-site storage you will need a facility that is both temperature and humidity controlled. Storage facilities that cater to wine can sometimes be ideal. But again, you'll have to check the laws in your State, because moving the confections to a non-approved facility before sale might not be allowed.
8) There are issues that come into play when you sell food to the public that you may not have considered. For example, it's very typical to include liquors and other alcohol-based flavorings in confections. This is usually allowed, but many States strictly regulate the percentage of alcohol permitted in each confection. That amount may be by volume or by weight. For example in New York it's by volume, and if you have more than 0.5% alcohol you cannot legal sell the confection to anyone under 21 years old, and any packaging you produce must contain a alcoholic beverage warning label!
9) Also, you may very well run into labeling requirements. The FDA has strict rules about how this needs to be done. It's not overly difficult, but you have do to it properly.
Again, and above all, see #1.
Tet - this is a fairly standard business practice. It's called contract or white label manufacturing. In some instances the company puts your name on their products. In others you contract with them to make your products on their equipment. There is no employee/employer relationship required for this. In fact you would not want that, and neither would they.
Of course the devil is in the details. The company you contract with might not have the equipment to make every different confection you wish to offer. Or the amount of products you wish produced might not meet their minimum production requirements.
And of course you can't patent a confection, so if you have a really great confection that you invented, and it catches on, they'll probably steal the idea from you. Your attorney may be able to put together a non-disclosure/non-compete agreement that holds water. The value of those varies from State to State.
But it's a fairly typical arrangement, and worth looking into if you don't want to personally make the confections and you are pushing adequate volume. If your projected volume is low however, this is probably not the way to go.
I actually have no answers about selling online, but I do have a thought that has worked for me in my state. Check your cottage business laws. I am selling through farmer's markets and at vendor fairs, and I've established a solid reputation in just 18 mos. I've also had a few people ask me if they can invest in setting me up with a storefront.
You bring up a very good point. Unfortunately, New York's cottage laws specifically forbid internet sales. And oddly, they also specifically forbid chocolate!
Created a new discussion "Cost of goods produced":
New Chocolate Brand - "Palette"