Turning your product idea into a manufactured reality used to rely on significant capital to source the required raw materials, storage and manufacturing space, as well as the specialist equipment needed to produce your finished product.
Toll processing, an agreement with a third party company where they agree to process raw materials, package and even ship a final product can help remove the guesswork of what scale you need your production to have and ensure you can rapidly adapt to changing marketing conditions.
All agreements with other manufacturers rely on mutual trust, and to aid in this a toll manufacturing agreement is almost always set up between the owner of the intellectual property and the contracted manufacturer or toll processor.
Here are some important points to include in your toll manufacturing agreement.
Trade Secrets
Some aspects of your product are secrets that give your business an edge over other manufacturers, and so you need to outline what can and cannot be disclosed about a product they are part of the manufacturing process of.
You will need to include both what trade secrets cannot be disclosed, the obligations on the manufacturers to avoid their disclosure and the protocols they will take with regards to information security.
ow trade secrets are accessed, stored and transmitted to others, as well as the requirements for new and departing employees.
Product Requirements and Specifications
The particular methods in which you expect the product to be made should be disclosed, as well as your requirements with regards to inspection and the availability of samples.
As well as this, you should detail how the specifications and designs can be altered, as well as the expected timetable for delivery and the completion criteria for the project.
Costs
The contract needs to conclude with the amount the manufacturer will be paid, either per unit, per day or on completion of a project.