Questions to Ask Before Signing a Cosmetic Manufacturing Contract

Who owns the formula, the artwork and the data?

Intellectual property is the clause that costs the most when it is missing, because it only matters at the moment you want to leave, scale or sell the brand.

Questions to ask:

• **If this is an ODM product from your library, what exactly do I own?** Usually the brand name, artwork and trade dress, but not the formula. That means you cannot take the formula to another factory. Ask whether the same base is sold to other brands and whether any exclusivity on a variant is possible and on what terms.
• **If you develop a custom formula for me, who owns it?** Ownership can sit with the brand, with the manufacturer, or be shared. If you are paying development fees, it is reasonable to ask for ownership or at least a licence that lets you manufacture elsewhere. Get the answer in writing, including whether you receive the full formula sheet with percentages.
• **Who owns the test data?** Stability, safety and efficacy reports are needed for registration in most markets. Confirm that you receive copies and can use them in filings.
• **What about packaging tooling and artwork files?** Custom moulds, printing plates and dielines may be paid by you but held by the factory. Clarify who owns them and whether they can be released.
• **Is there a confidentiality clause that protects my brief and my customer data?** It should run both ways and survive the end of the contract.

A common mistake is to rely on a separate NDA signed early in the discussion and assume it covers production. Check that the manufacturing agreement itself restates confidentiality and IP terms, or references the NDA explicitly. If a manufacturer cannot say clearly who owns what, that is the answer.

What does the quality specification actually say?

A contract that says the manufacturer will supply products of good quality is a contract with no quality clause. Quality needs to be defined as measurable criteria, attached as a schedule, and tied to an acceptance procedure.

Ask:

• **What is the product specification I am signing against?** It should cover appearance, colour, odour, viscosity or texture ranges, pH range where relevant, fill weight or volume with tolerance, microbial limits and packaging components with part numbers.
• **Is the approved sample referenced in the contract?** The gold standard sample, signed and dated by both parties and retained by each, is the physical definition of acceptable. The contract should say that production must conform to it.
• **What tests are run on each batch, and do I receive the certificate of analysis?** Ask which tests are routine, which are periodic, and whether external labs are used.
• **What is the inspection and acceptance procedure?** How many days do you have after delivery to inspect and reject, and on what grounds? Is a third-party pre-shipment inspection allowed?
• **What happens when a batch is out of specification?** Rework, replacement, credit or refund, and who pays for freight and disposal.
• **How are changes to the formula or components handled?** Suppliers sometimes substitute raw materials when a supplier changes. Require written notice and your approval for any change that affects the specification or the label.

This section is where the technical team of a serious skincare or beauty supplement OEM will shine, because they already work with such specifications internally. If the manufacturer resists attaching a specification, ask why.

Pricing, minimums and what happens when volumes change

Price per unit is only one line of a commercial clause. The surrounding terms decide what you actually pay over the life of the relationship.

Questions to put on the table:

• **What is included in the unit price?** Bulk formulation, filling, primary packaging, secondary packaging, labelling, shrink wrap, outer cartons, palletisation. Each one may be inside or outside the quote. Ask for a line-item breakdown.
• **What is the minimum order quantity, and is it per SKU or per order?** In Thai cosmetic OEM the standard reference is 1,000 units per SKU. Confirm whether variants of the same product count as separate SKUs for minimum purposes.
• **How long is the price valid, and what triggers a change?** Raw material and packaging prices move. A fair clause names the trigger, requires notice and gives you the right to review.
• **Are there development, tooling or set-up fees, and are they credited against production?**
• **What are the payment terms?** Deposit percentage, balance trigger, currency, and whether a late payment carries interest or stops production.
• **What happens to raw materials and components bought for my order if I cancel or delay?** Factories often buy packaging and ingredients ahead. The contract should state what you owe for committed materials and how long they are held.
• **Is there any exclusivity or volume commitment on my side?** Some agreements oblige the brand to order a minimum per year. Make sure any such commitment is realistic.

If you are comparing several factories, ask each one the same questions and compare the full answer, not the headline price. A slightly higher unit price with transparent surrounding terms is usually cheaper than a low price with open-ended extras.

Lead time, delays and force majeure

Brands plan launches, retailers plan listings, and both depend on the factory delivering when it said it would. The contract should describe how lead time is set and what happens when it slips, without pretending that every delay is avoidable.

Ask:

• **How is lead time defined and when does the clock start?** Usually from approval of the pre-production sample, receipt of deposit and receipt of all packaging artwork, whichever is last. Delays on your side reset the clock, so understand what you must deliver and when.
• **Which steps depend on third parties?** Packaging suppliers, printing, raw material imports, external testing. Ask how those are managed and whether the factory holds buffer stock of your components.
• **What notice do I receive if a delay is expected?** A clause requiring prompt written notice with a revised date is more useful than a penalty you will never enforce.
• **Are there consequences for late delivery?** Options range from discounts to the right to cancel beyond a certain delay. Be realistic; Thai manufacturers rarely accept heavy penalties, but a clear cancellation right protects you.
• **How is force majeure defined?** It should cover genuine events outside either party's control, not routine supplier problems.
• **What is the process for urgent reorders?** Whether a repeat order can be prioritised and how that affects price.

Lead times are decided by product complexity, packaging sourcing, testing requirements and the factory's schedule, which is why no responsible manufacturer will promise a fixed number before scoping the project. What you can sign is a process for setting the date and handling changes.

Regulatory responsibility, documents and liability

Cosmetics are regulated products, and the contract should say who does what for registration, labelling and recalls. Many disputes come from both parties assuming the other handled a filing.

Questions to ask:

• **Which documents will you provide, and for which markets?** Formula disclosure in the format regulators need, certificates of analysis, stability and safety summaries, GMP evidence for the site, free sale certificates, halal or other certificates where available. Confirm per product; do not accept a general assurance that everything is covered.
• **Who is responsible for Thai FDA notification and for registration in my market?** The brand owner or its importer usually files abroad, with the factory supplying the technical file. Make this explicit.
• **Who checks label compliance?** The factory may print what you send; the content is usually your responsibility. Ask whether they review artwork against the formula and against target-market rules, and whether that review is advisory or a warranty.
• **What warranty does the manufacturer give?** Typically that the product conforms to specification, was made under GMP, and does not infringe third-party rights for the formula they supplied. Understand the limits.
• **What happens in a recall or a safety complaint?** Who investigates, who pays, how batch traceability works, and how fast records can be produced.
• **Is there product liability insurance, and does it extend to my market?**
• **Which law and which forum govern disputes?** Thai law and Thai courts or arbitration are common for Thai factories; know what that means for enforcement.

Treat any regulatory statement in the contract as reference and confirm requirements with the authority or your regulatory consultant in each market, because rules change and vary between countries.

Exit, continuity and the questions people forget

The last group of questions concerns the end of the relationship, which is easiest to negotiate at the beginning when everyone is friendly.

• **How can either party terminate, and with what notice?** Look for termination for convenience with a reasonable notice period, plus termination for breach with a cure period.
• **What happens to my inventory, components and tooling on termination?** You should be able to buy finished goods and components at agreed prices and collect tooling you paid for.
• **Do I receive the technical file to move production?** If you own the formula, the contract should oblige the factory to hand over the full technical documentation. If you do not, you need to know that your product cannot move.
• **What technology transfer or support is available if I move?** Some manufacturers offer a transition period.
• **Can the manufacturer subcontract?** If parts of production, such as fragrance compounding or a home fragrance OEM line, are done by a partner facility, the contract should require disclosure and the same quality standards.
• **Is there a non-compete or exclusivity that limits me working with other factories?** Read it carefully; it should be narrow if it exists at all.
• **How are amendments made?** In writing, signed by both parties, not by chat message.

One practical piece of advice: have the contract reviewed by a lawyer who understands Thai commercial law and your own jurisdiction, and bring the technical questions above to the manufacturer before legal review so the lawyer is working on an informed draft. For brand owners who want to start your own brand without managing a factory relationship directly, a managed OEM partner such as 5FINE coordinates formulation, packaging, documentation and production through GMP-certified partner facilities; the questions in this guide apply equally to that kind of agreement, and a good partner will welcome them.