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Introduction

Founding a successful food or beverage product is a dream most foodies have considered. And why not? The world needs innovation in food and drink and it’s a deliciously rewarding business venture. Nevertheless, according to the latest market research, over three quarters of all new product launches across the Fast-Moving Consumer Goods (FMCG) sector fail in their first year. Whilst we didn’t want to begin on such a sour note (!) it’s important to emphasise this fact so you can embark on your endeavour with your eyes wide open. A lack of success can often be down to not having the right product at the right time, marketing it wrong, running out of money or poor management (amongst many other things). However, a lot of these common problems can be alleviated, and you can protect yourself through knowing your rights with regards to the law and having the right contracts in place. At the end of 2016, YouGov interviewed over 1000 UK SMEs and we had the stats analysed by the Centre of Business and Economics Research (CEBR). According to this research, the Food and Beverage Sector loses over £1.5 billion through not taking care of their legal business. Ignoring the law means legal problems will eventually bite, and we cannot express how important it is to protect your ideas and the foundations of your product from the outset. We hope you enjoy this plain-English LawBite (we realise our name is quite apt here!) guide that we have created for starting an FMCG brand with the business’s legals in mind. Please note, some of these stages will of course over-lap and some things may not necessarily apply to you...

Corporate Preparation

The business plan

Having a solid business plan is the first essential, and not just for if you require funding from investors as many people believe. It is great to have a plan of action from which to understand where that business should be going and to have ballpark figures showing the likely cost to get there. In reality you’re likely to stray from it, due to the nature of running a business in practise.

First thing is to identify your unique proposition, which should be clear enough to write on the back of a business card. You then need to describe the market opportunity, your strategy and the risks you have identified.

However, cash is king and launching a new product can be an expensive endeavour, particularly in its early stages. Your business plan will allow you to visualise how much you’re likely to be spending, leaving room for error, against how much you’re going to have to make to cover that expense and hopefully turn a profit. From this you will also be able to articulate your motives and objectives and instigate a marketing strategy. It is better to think about potential problems early than come across them when you have already doled out the cash; we all know the saying ‘fail to prepare, prepare to fail.’ If you’re stuck on where to begin with this, the Prince's Trust website provides a solid template business plan you could use.

Choosing your company structure

Another thing you should be doing at this stage would be deciding whether to set up as a sole trader, limited company (Ltd) or as a limited liability partnership (LLP).

Setting up as a sole trader is certainly the quicker and easier option as there are far less complicated accounts to file. However, the major drawback is that you are personally liable for any losses accrued by the business. This means that creditors can go after your personal assets and your credit rating will almost definitely be affected, hindering your ability to borrow money.

To avert this heavy risk, many product launches take the form of a limited company and as such register or ‘incorporate’ with Companies House (which you can do so here), giving it its own company registration number and registered office address. As the company is registered at Companies House, certain business information must be filed with them and made publicly available such as names of shareholders, directors and the company’s annual accounts.

Although there are many benefits to setting up your business as a company, it is a more complicated status and you must comply with the Companies Act 2006. Benefits include:

  • Limiting your liability so your company is a distinct legal entity from yourself. Usually the only liability you have is the amount you invest in the company through buying its shares. So, as the name suggests, you receive legal protection from your company’s finances. If things were to go wrong, the creditors could not come after your own personal assets e.g. your house or that expensive painting handed down by uncle Geoffrey.
  • It is easier to expand your business if you want to grow. This is because some agencies won’t work with sole traders so having the ‘company’ status is valuable.
  • It is easier to raise finance if you’re trading as a company rather than an individual, again if you are looking to expand and need the extra cash.

It is advisable at this stage (if there is more than one person who is invested in the company as a shareholder) to have a shareholders’ agreement in place. This will govern how the company is run and who is meant to do what, preventing costly disputes later down the line. It will also dictate what to do in the case of a deadlock between shareholders. You can bet your bottom dollar that Innocent founders Richard Reed, Adam Balon and Jon Wright had a shareholder agreement in place before selling more than 90% of their shares to Coca-Cola for £100 million. Prior to or in the course of implementing the agreement, you may also wish to consider amending the Articles of Association that ensure the terms of the shareholders’ agreement are reflected in the way directors run the company. This is a particular consideration when shareholders also act as directors.

You have to appoint at least one Director who has to ensure that the business is solvent at all times. There can be risks of being a director that you will need to consider.

Like a limited company, a limited liability partnership (LLP) is a separate legal entity in its own right. However, members of an LLP are taxed as self-employed individuals so the tax treatment of an LLP can be more beneficial than that of a limited company depending on the circumstances. It does, however, mean that a Partnership Agreement needs to be formed with another party and it will need a designated member who is responsible for making all the filings at Companies House. It is a legal requirement for there to be a partnership agreement which governs how this arrangement is run, which members of the partnership must stick to.

Guarding your ideas

At this point in time, you’re probably excitedly talking about your endeavour with anyone who will listen, which is great as it’s a fantastic way to soundboard ideas and sense-check your vision. Perhaps your product will be particularly innovative and break new culinary ground (all of which will be discussed and carefully planned for in your business plan of course) which you’re going to want to keep secret until you’re fully established. The best way to do this is normally getting people to sign a confidentiality agreement or ‘non-disclosure agreement’ (NDA) before you start talking. Bear in mind they’re not only relevant at this stage but can be used whenever you want to secure some protection for your idea or intentions as you grow. For example, much later down the line you might want to expand your brand into new product lines and need to recruit people and/or agencies to achieve this but do not want them to pass this information on. An NDA can a simple agreement to discuss a new idea, or can cover what will happen in a joint venture.

Intellectual Property

You probably have an idea of what your food/drink product will be—the possibilities are endless. With some things happening faster than others, at some point you’re going to have to stop to do a ‘branding’ exercise if you want to be the product which is regularly added to shopping baskets. The list includes coming up with a product name, logo and general designs for the website plus any marketing ‘collateral’ you might have. This is a three-step process: 1) Coming up with the ideas 2) Executing and 3) Protecting them. This is what’s known as as your ‘IP’ (intellectual property) and although it’s not usually the first legal issue that comes to mind, it IS valuable and therefore worth safeguarding- remember, it’s your identity.

Naming your product

There are many different approaches here, and whilst this isn’t ‘a guide to branding and marketing’ we can certainly help you out with how to do it legally so you don’t run into any problems later down the line. On many occasions there have been products which have been designed and begun trading only to receive a letter of complaint from a company which is already trading under that name (or something very similar) claiming that they are confusing the market and they must cease using it (and sometimes even reimburse for damages with an IP infringement claim). It’s important to follow these simple steps to make sure:

  1. It’s not already registered with Companies House and it’s allowed to actually be used in the marketplace. You can check this using their Company WebCheck.
  2. It hasn’t been registered already as a trademark. You can check here using the Intellectual Property Office (IPO) ‘Search for a Trademark’ page.
  3. The website address/domain name is available. (Okay this is not specifically a ‘legal’ consideration and you can actually buy these off the domain’s owner, but that can be costly and you don’t need the hassle). Easily check here using 123-reg.

Do keep in mind, however, that you cannot trade mark certain things, so you might not be able to protect your brand entirely. Have a look at these brief guidelines on the government’s IP website before deciding on a name.

Logos and other design work

Another part of the ‘branding exercise’ is creating the look and feel of your product. Unless you have fantastic design and branding skills (and the time to utilise them) you might want to hire a freelance graphic designer or an agency to create a logo and any other marketing collateral e.g. a slogan for you. If you do hire a designer or an agency, make sure you have a contract in place which specifies precisely who owns the intellectual property in whatever they create, as well as stating a deadline for the project and the costs involved. A ‘Supply of Services’ style contract would be a good place to start.

Again, bear in mind some images and phrases will not be able to be trademarked (an important step outlined below) so check the government’s IP website before making any final decisions.

Once you have these lovely branding creations in your grasp, you really should think about protecting them and this means registering a trademark. Having a trademark allows you to:

  • Take appropriate legal action against people using your brand without prior consent
  • Sell and license your brand
  • Use the famous ® symbol next to images of your brand which will act as a deterrent for those wishing to use it without your knowledge

How much does it cost to register a trademark?

It costs £170 to register a trademark in one class, which refers to the type of product or service the trademark refers to, e.g. ‘class 34: food and drink services’. Each additional class you need costs £50. These are the ‘official’ government fees though you might be interested in seeking professional help as the forms are quite complicated to fill out.

How do you protect a recipe?

In today’s increasingly competitive luxury food climate, it is more important than ever to protect the various intellectual property rights attaching to a brand. Therein is where the real value lies and is what distinguishes producers from the crowd. But what elements of a food brand and its products are in fact capable of intellectual property protection and how can this be achieved?

Photographs: Culinary Artistic Creations?

Since imagery is often at the heart of a fine food brand’s marketing initiative, retaining control over the dissemination of these images and preventing unauthorised use is key. The above picture took the spotlight in a fairly recent court decision which illustrated that, in the right circumstances, photographs of food will be protected by copyright. The judge agreed with the photographer’s argument that his choice of three prawns positioned symmetrically on a square white plate, combined with the lighting, viewpoint and other aspects of the image, were sufficiently creative to obtain copyright protection.

Whilst the photography of static food items might not immediately be associated with creative flair, provided an image constitutes the photographer’s own intellectual creation, the standard is fairly low in terms of originality. The concept of originality requires an element of skill, judgment and effort on the part of the creator. Lighting, angle, focus and framing are all relevant factors when it comes to judgment and skill. In short, if a photographer successfully puts his own unique stamp on an original photo, it is likely to attract copyright protection.

It is also worth noting that, where third parties are commissioned to undertake food photography (or any other work) for a business, the contractor will typically own all rights in their creation. This is in contrast to employees, whose work will generally belong to their employer. It is therefore vital to obtain a written assignment of intellectual property rights from commissioned contractors.

Recipes: Lifeblood of the Brand

Signature recipes are likely to be crucial to the success of a high-end food business. They will also automatically be protected by copyright, provided they have been written down (or recorded in some other way) and are sufficiently original.

Since individual recipes are often developed from, or based on, pre-existing recipes, independent creation can be a barrier to copyright protection. That said, copyright does not require the whole work to be original. So, if a recipe is essentially a rehash of the classic British favourite shepherd’s pie, the chances of protection are slim. If, on the other hand, a certain amount of skill or labour has been invested in the development of a new recipe, the contribution is likely to be sufficiently original to qualify for protection. This ultimately prevents other brands from making or selling the dish.

Novel and Inventive Elements

Some of the more obscure food compositions, production or cooking techniques and technological advances may even be worthy of patent protection, provided they involve a novel and innovative process. In view of the hefty costs involved though, patenting is not always an attractive or practical option for food producers.

If, however, a brand has the means and opportunity to secure a patent it should consider taking advantage of this. Patents give monopoly protection for 20 years and thus make life difficult for competitors who may wish to mimic the creation. It’s also vital not to publicise the invention before applying for a patent (through trade food shows, demonstrations or otherwise) as to do so risks losing the possibility of protection.

The Brand Itself

The name and ‘get up’ of a product is an extremely valuable commercial asset in its own right. Trade mark protection can be critical to product recognition, deterring potential copy-cats, establishing brand loyalty and generating commercial success.

Names, logos, slogans, packaging, shapes, colours and even smells are all theoretically capable of trade mark protection. The shape of the vintage Coca Cola bottle, Nestlé’s slogan ‘HAVE A BREAK – HAVE A KIT KAT’ and the turquoise colour of the Heinz baked bean tin are all examples of protected marks.

Choosing a mark that is distinctive, rather than descriptive or generic, is one of the holy grails of trade mark law. MARS for chocolate bars is a perfect example of a name that bears no relation to the product itself and cannot be deemed descriptive. Completely made up words are also a fairly safe bet.

The original appearance of food products and/or their packaging, provided they are novel and not commonplace, may also be protected by design rights. This may result from features of the lines, contours, colours, shape, texture and/or materials of the product itself, but note that mere surface decoration does not count.

Trade Secrets

Commercially sensitive information, knowledge of which creates an advantage over market competitors, may also be protected as a trade secret. This could cover all sorts of material within the food industry, including products, recipes, techniques and methods.

Just like copyright, trade secrets do not require registration. They do, however, require strict controls over their disclosure. Essentially this means that they should only be disclosed on a ‘need to know’ basis and imposing an express obligation of confidence. Practically speaking, asking third parties (including employees) to sign written confidentiality agreements before disclosing any secrets to them is always a shrewd measure to take.

IP Protection: An Investment Worth Making

Failure to protect the potentially wide array of intellectual property created by luxury food sector businesses can diminish and dilute what is, or could be, a hugely reputable brand. Make sure your brand development strategy makes identifying and protecting this valuable property a fundamental priority.

Licences

Getting a product on the shelf of a major retailer is a goal most food and drinks producers aspire to. Of course this takes time, money and effort and the risks you take are all on you... With this in mind, some producers choose instead to get a license from other brands to sell their product. You might have come up with a delicious new healthy recipe for microwavable spag bol and you think it would be ideally suited to a brand like Weight Watchers. You could decide to approach them and get a license to ask to use their branding, greatly increasing your chances of getting it on the shelves whilst sharing the cost and risk. A license agreement is where one party grants the rights of their intellectual property (the licensor) to another party (the licensee) so it is able to use such rights. The licensor will usually receive an agreed payment- a fee or royalty. Here is a non-exhaustive list of things you need to think about when receiving a license agreement from a larger organisation:

  1. Term and territory: How long is the Term for which you have rights? Is there any extension at the end of the Term or a sell-off period for any stock? How large is the territory it occupies?
  2. Grant of rights: Are your rights exclusive or non-exclusive? If they are non-exclusive are you able to protect the value of your licence? What rights do you have? Can you sub-license??
  3. Approvals: Do you need any approvals from the Licensor before you carry out particular activities? If so, are there any time limits the Licensor must comply with? How e.g. verbal or written must this be given?
  4. Payments: If there is an advance or licence fee when is that payable? How is any royalty or commission calculated? What is the “base price” - is it a dealer or retail price? Can deductions be made from that base price before calculating the royalty?
  5. Accounting: How often do you have to account for royalties? In what format must statements be delivered and in what currency must you pay?
  6. Ownership: Do you have a promise in the agreement that the product is owned by the Licensor and that they are fully entitled to grant you all rights? Have all rights granted to you been fully cleared and paid for?
  7. Marketing Commitments and Service Levels: Are you agreeing to any marketing or service level commitments? If so, are they precise, measurable, achievable and timetabled? Are there any service level commitments you need to impose on the Licensor
  8. Changing Contractual Partners: Are you able to assign the agreement to someone else if you need to? If you take in investment and have a change of control does that affect your rights—can the Licensor terminate?

Conversely, some producers have come up with a method so innovative e.g. a new manufacturing process that they choose instead to offer a license to larger brands to use such an invention. Usually, this method would be patented. The same points to think about for a license agreement where you are receiving rights would apply (see above).

Remember, when you are in conversation with another organisation about your recipe or manufacturing ideas, ask them to sign a confidentiality agreement (which may be your non-disclosure agreement) to protect those ideas from being spread. This should offer you a basic level of protection as they include non-compete and non-solicitation clauses too. However, bear in mind they might not want to sign one - this doesn’t mean you shouldn’t engage with conversation with them if it is potentially a big deal!

Securing Finance

Launching a food or drink product is a business endeavour that does require some seed capital (the initial money needed to start a business). If this is your dream, it shouldn’t be a stumbling block to begin your culinary adventure. Here are a few traditional and not-so traditional (‘alternative finance’) routes you could take (aside from using your own cash) to fund that initial investment and considerations to take into account for

  • Friends & family: Often the first port of call after your own investment. A good source, though conflict can arise when you bring money into any relationship. Make sure you have a loan agreement in place if you are borrowing the money or you may even want to give away equity (shares) here instead, bringing them more deeply into the business as a shareholder.
  • Banks: It is increasingly difficult to get a bank loan for a small business, though it is not impossible. You will have to provide the bank with very realistic cash flow forecasts, whilst proving that you will be able to pay back the loan with interest. Often - and here’s the important part - banks will want added security for their investment, which often means they’ll want to secure it against your possessions e.g. your car or house. Think carefully about how much you are willing to risk here. They will give you a contract for the loan which you should ensure you understand fully. One point to make here would be on the subject of your Credit Rating, which a bank will use to determine whether or not they’d like to lend to you. Services like Experian’s My Business Profile offer access to all your business report and score details along with the help and support you need to understand the information and investigate or correct anything that doesn’t look quite right. Have confidence when applying for a business loan or credit with suppliers, check your business credit score for FREE with Experian.
    • Be smarter about how others see your business. Check your Experian business credit score. See how lenders, suppliers and customers see you.
    • Improve your  business credit score. See what’s affecting your score. Take steps to improve it, and make sure it’s as good as it can be – always.
    • Create new opportunities to grow your business. Access preferential credit terms. Unlock new sources of finance. Grow your business.
  • Government loans: There are currently a few government initiatives who will lend to start-up businesses. One of the largest (that we work with) is Startup Loans, which has been developed specifically for start-up businesses who have been trading less than 2 years. You can borrow up to £25,000, with an interest rate which is currently set at 6% (Sept ‘15). As this is technically a personal loan, you will be personally responsible for repaying that loan and will have to handle the repercussions if you cannot.
  • Private investors e.g. ‘Angels’ or Private Equity firms: With this option, you will probably be selling shares in your company in return for investment or it might be a loan. They will bring tough investor/funding agreements to the table so make sure you know what you’re giving up and what to expect from your relationship with them.

Some key points you must consider and understand would be:

  1. What is being paid, when is it being paid, and how it is being paid? E.g. is the money being paid all at once or in tranches?
  2. What is the payment in return for? I.e. what is the structure of the deal. This could be in return for shares or through a secured or unsecured loan. A ‘secured’ loan means it is secured against the company’s assets which gives more protection to the investor.
  3. If you are giving away shares, you will need to work out the valuation of the company. Once agreement on valuation is achieved between you and the investor, it’s possible to work out what 100% of the shares in the company are currently worth and then to work out what the investor’s contribution is worth.

    Remember, if you give away more than 25% of your company (i.e. your shares are worth less than 75%), you are giving away a substantial amount of control since you cannot pass a ‘Special Resolution’ e.g. to change the company name
  4. Next, you must decide what type of shares you are giving away, which is where it gets a little more complicated. The shares may be “ordinary” shares – but companies can have more than one class of ordinary shares. They may have “A” shares or “B” shares with different rights (e.g. the “A” shares carry voting rights but the “B” shares don’t). Some investors like to get “preference shares”, which carry a guaranteed return or “dividend” each year out of profits and usually are given preference in a situation if something is to go wrong. Some investors like to have “convertible” preference shares which they can convert into ordinary shares after a certain date so as to protect their position if the company starts doing well.
  5. Keep in mind the future too. What happens to everyone’s shares if you want to give away more? There is the issue of dilution here which will need to be discussed and agreed upon. Also look out for what happens to the investors shares if you miss your targets
  6. Finally, what kind of operational control are you giving up in return for the investment? Sometimes the type of share you give away will mean you will have to consult the investor on key business decisions such as the desire to raise further funding or changing the nature of the business.

Remember, any big investor worth their salt will carry out a thorough due diligence investigation so you must make sure to have all your legals under control with the correct paperwork and that your accounts are in line.

Side-note: Something which will make your company more desirable to invest in is if you can provide them with tax breaks by signing up to the Enterprise Investment Scheme (EIS) or Seed Enterprise Investment Scheme (SEIS). A good summary of what this is you can read here. You can find out more information about registering your company for the scheme on the government website.

  • Crowdfunding: This is a popular way to raise for start-ups via the public mandate and is essentially lots of people putting in relatively small amounts of money. There are 2 main types for you to consider and to understand the implications of each:
    1. Equity-based, for example Crowdcube (LawBite has raised twice on this platform) or Seedrs. Investors will receive a stake in the company via shares in the hopes you will grow and they will benefit. In this case, investors usually sign up to the company’s Articles and will receive a simple shareholding.
    2. Rewards-based, for example Kickstarter or Crowdfunder. In this case, investors will receive a tangible item or service in return for their money e.g. ‘invest £50 and you will receive 100 organic snack bars, invest £1000 and you will receive 5 years’ supply.’
  • Peer-to-peer lending or ‘crowdlending’: This is for more established businesses but one to mention as a consideration for future growth. Often an unsecured personal loan, money is loaned via an online platform such as Funding Circle in return for interest. The interest rate is set by the lender or it is established by the intermediary company based on the company’s credit analysis.
  • Pension-led funding: If you have a pension pot, recent legislative changes to pension rules means that you can now use it to fund your business. In return, you can receive tax-free payments from your business to boost your pension. For a more detailed explanation of how this could work for you, visit our partners over at Pension Led Funding.

As you can see there are many ways for you to access finance to launch your product and this list is not exhaustive. If you want an easy and free way to see your finance options, go to Alternative Business Funding. For many of these scenarios, you will be engaging with others in a contractual agreement. You will need to have fully understood the terms and implications of these arrangements or you could be putting yourself at risk.

Building a Website

Whilst having a product doesn’t mean you HAVE to have a website, it’s a great platform to build a brand, notify people of how to get in contact and is generally a good central point for dealing with people outside your company. If you can make your own website—great! But even if you can, you might not have the time so hiring someone to do it is your likely route. As with anyone who you engage with outside your company, for example a freelancer or an agency, you absolutely must have a contract in place before they undertake work with you. This will avoid any conflict over the cost and how it is to be paid, what is to be delivered and when. It will also deal with what is to happen if a problem arises.

Once you have built your website, there are certain legal requirements you must abide by as well which should be stated explicitly on your website, usually in the footer of the page or in an ‘About’ section. There are four main obligations you should be aware of, though not all will necessarily apply:

  1. Terms and Conditions of Website Use (Ts and Cs): This document is used if you run a website for consumers. It sets out the limits of your responsibilities when they use your website and some things which they are not allowed to do.
  2. Acceptable Use: Again, this document is used if you run a website for consumers. The document sets some rules for the consumers in the way that they are allowed to use your website.
  3. Data Protection and Privacy Policy: You will need this if you are collecting data at any point, for example if you wanted to send out a newsletter and you had to collect the user’s email address to receive it. This will state what you intend to do with the data, how it is stored etc. The Data Protection Act defines ‘personal data’ and creates rights for those who have their data stored and responsibilities for those who store, process or transmit such data.
  4. Cookies: You will need this if you are collecting cookies (a term given to mean the message that is sent from your website server to the user’s website browser, having entered in information which will allow the user to be identified).

A lot of websites will bundle these together in one or two documents, e.g. you will often find Website Terms and Conditions with the Acceptable Use Policy or the Cookies and Privacy Policy together.

One final legality to note here is to be careful where you source your website images from so as not to infringe an individual or company’s copyright. It would be wise not to use random images from Google search without asking the owner’s permission, for example. As you are essentially using their images without permission to sell your product, you can be sued for damages and be made to pay costs.

Data Protection

What are my obligations with regards to collecting data?

We get asked a lot about this, as it’s a particularly hot topic at the moment. The Data Protection Act 1998 defines how information about living people may be legally processed and handled. Businesses are required to comply with eight data protection principles and failure to do so may result in regulatory action by the Information Commissioners Office (ICO). The fundamental principles of data protection enshrined in the Act provide that personal data must:

  • be processed fairly and lawfully;
  • be obtained only for lawful purposes and not processed in any manner incompatible with those purposes;
  • be adequate, relevant and not excessive;
  • be accurate and where necessary, kept up to date;
  • not be retained for longer than necessary;
  • be processed in accordance with the rights and freedoms of data subjects under the Act;
  • be protected against unauthorised or unlawful processing and against accidental loss, destruction or damage; and
  • not be transferred to a country or territory outside the European Economic Area (EEA) unless that country or territory protects the rights and freedoms of data subjects.

If these principles are complied with, personal data may be processed for core business purposes (i.e. staff administration/business marketing activities) without the need to notify the Information Commissioner. If data is processed for other purposes, the Information Commissioner must be notified.

Subject Access Requests

It should also be noted that individuals have a right under the Act to obtain a copy of the information held about them. This is not limited to employees. If a business receives such a ‘subject access request’, a response must be given promptly and no later than 40 days and this covers all data, whether it is held electronically, in paper form or in any other form.

Review of Data Protection

SMEs should consider conducting a review of the personal data that they process. If sensitive personal data is processed, specialist advice may be needed and extra care taken where sensitive personal data (including details about race, political opinion, religious belief, trade union affiliation, physical or mental health, sexual life and the alleged commission of any offence) is concerned as conditions for processing such data are much more stringent than in relation to general personal data.

The ICO has developed an online self-assessment tool which can be used by small and medium-sized organisations (SMEs) to assess their compliance with the Data Protection Act and improve data handling procedures. The tool provides a rating of compliance with the Act based on responses to a questionnaire and includes links to relevant guidance and information.

New EU General Data Protection Regulation (GDPR)

In light of the foregoing and several recent high-profile ICO decisions and a heightened awareness of data protection by the general public, all businesses including SMEs need to have a proper understanding of their obligations under the Data Protection Act when handling personal data. Furthermore, with the forthcoming EU General Data Protection Regulation (GDPR), an even more stringent data protection regime, increased financial penalties and a wider definition of ‘personal data’, due to come into being in 2018, the need for small businesses to tighten up their data protection procedures has never been greater.

The GDPR is expected to become law in 2018 and whilst the UK may have voted to leave the EU, the regulation will affect all UK businesses due to the expanded territorial reach provided for in the Regulation. The GDPR applies to data controllers and processors outside the EU whose processing activities relate to the offering of goods or services to, or the monitoring the behaviour (within the EU) of, EU data subjects.

This means in practice that companies outside the EU targeting customers in the EU will be subject to the GDPR. As such, UK companies will be obliged to comply and in any event, it appears that the UK will still be within the EU in 2018 when the Regulation is due to come into force. Therefore, legal services for businesses going forward must necessarily include compliance with current data protection principles and with the new GDPR by 2018, in order to minimise the risk of finding themselves at odds with the new rules and open to hefty fines.

We hope you enjoyed Part 1 of our plain-English guide to starting a food or beverage product. Parts 2 and 3 will go into detail about producing and running your business so do have a look at them too. Of course none of this information is a complete substitute for professional legal advice so if you’re confused about any of the above or would simply like the reassurance of a solicitor, LawBite offers a free 15-minute consultation, which you can access by submitting an enquiry here. Good luck!

Contributors:

Lizzie Knight, Head of Marketing
Jeremy Barnett, Regulatory and Food Safety Barrister
Hannah Newell, Corporate and Commercial LawBrief (LawBite lawyer)