For starting your food business with Detroit Kitchen Connect Licensing Guidebook

HOW TO START A SPECIALITY FOOD PRODUCT IN DETROIT

I’m often asked, “How do I start, and where do I turn as I begin the process

of starting my own food business?” In many cases, I always answer this

question with a question: Where are you in your process? Are you an

entrepreneur who sees a niche market for your food product? Are you a

small-scale farmer who wants to develop value-added food products? Are

you a caterer? Are you a restaurant owner who would like to provide one

of your signature products to the retail market?

Specialty food producers – often operating small micro enterprises – are a

growing industry in Detroit. Yet starting a food business in Detroit will

require you to take many steps including licensing, food safety training, and

business skill-building. In addition, recipes and food products for sale will

need to be reviewed by Michigan Department of Agriculture & Rural

Development or The City of Detroit.

I have developed this guidebook to answer the questions that I’m most

frequently asked when someone is inquiring about starting a food

business in Detroit.

- Devita Davison

“While Michigan’s

Cottage food law allow

people to sell certain

homemade foods directly

to the consumer, it

doesn’t allow them to sell

those products to a

retailer or restaurant. In

order to sell their wares

through retail outlets, or

over the internet, the

foods must be prepared

in a commercial kitchen –

and commercial kitchens

can be expensive!”

Non-potentially hazardous foods that do not require time and/or temperature control for safety (can be safely kept at room temperature and do not require refrigeration). Examples include: jams/jellies, breads, cookies and cakes, cooked fruit pies, dry herbs and dry herb mixes, dry baking mixes, popcorn, cotton candy, chocolate covered pretzels, marshmallows, coated or uncoated nuts, roasted coffee beans.

MICHIGAN COTTAGE FOOD LAW

FREQUENTLY ASKED QUESTIONS

What types of

Cottage Foods

can I produce in

my home?

No. If you qualify to operate under the Cottage Food law, you are exempt from obtaining a food establishment license under the Food Code. There are no application forms to complete, no registration process, and you do not need to obtain a food license or permit from MDARD.

Do I need to

complete an

application or

any other

paperwork with MDARD?

You should contact our Market Managers directly to discuss their requirements. Yes. Even though you meet the requirements of a Cottage Food Business, some farmers markets or other direct marketing venues may require vendors to have a food establishment license or to meet other requirements .

Does Eastern

Market require

that I have a food

license?

You cannot sell your Cottage Foods to a retailer. You cannot sell your Cottage Foods over the Internet, by mail order, or to wholesalers, brokers or other food distributors. All your sales must be face to face. You may take orders over the phone as long as the cash transaction and delivery of the product is face to face. If you are looking to wholesale your product Detroit Kitchen Connect and our partners may be able to assist you.

I would like to

sell-in to grocery

stores. How do I

become a licensed

food processor?

CHECKLIST FOR STARTING WITH DETROIT KITCHEN CONNECT

Access to the Detroit Kitchen Connect kitchens is limited to businesses that

are identified as qualified. As a resource, for those interested in starting

with Detroit Kitchen Connect, you should: Detroit Kitchen Connect is

a supportive entrepreneurial

environment that stimulates

the growth of businesses to

ensure economic vitality and

encourage job creation. We

are a part of a larger eco-

system that is committed to

helping food entrepreneurs

succeed.

GETTING STARTING WITH DETROIT KITCHEN CONNECT

Complete Application, provide all the information requested

General Business License

Food Safety/ ServSafe food certificate

Liability Insurance

Security Deposit

Application fee

After turning in the application, qualified applicants will be invited to

attend a orientation with The Detroit Kitchen Connect kitchen partners

and begin the process of acquiring their food processing license.

Where does one start? Let’s begin

The legal structure for your business determines where the business is to file its name

GENERAL BUSINESS LICENSE

In Michigan, you can establish a sole

proprietorship without filling any legal documents

with the Michigan state government. Sole

proprietorship and co-partnerships file their

names with the county clerk in the county in

which their business is located, and also in any

other county in which they transact business or

have an office.

Limited partnerships, limited liability companies,

and corporations are created by filing the

appropriate documents with the Michigan

Department of Licensing and Regulatory Affairs,

Bureau of Commercial Services Corporation

Division. When the Articles of Organization or

Application for Certificate of Authority is filed, the

Bureau assigns a six-digit file number and this

number is located on the document.

Resource: http://www.michigan.gov/lara/ LLC Filing Fee $50

AN ACT to codify the licensure and regulation of certain persons engaged in processing, manufacturing, production, packing, preparing, repacking, canning, preserving, freezing, fabricating, storing, selling, serving, or offering for sale food or drink for human consumption; to prescribe powers and duties of the department of agriculture. This law adopts the Code of Federal Regulations 21: PART 110 --Current Good Manufacturing Practice in Manufacturing, Packing, or Holding Human Food.

WHAT KIND OF FOOD LICENSES ARE REQUIRED?

Limited Wholesale Food Processor The same as a Wholesale food processor but limits annual gross wholesale sales made or business done in wholesale sales in the preceding licensing year to $25,000 or, $25,000 or less of the food is reasonably anticipated to be sold for the current licensing year. Only the food sales from the wholesale food processor operation are used in computing the annual gross sales.

Michigan Food Law Act #92 of 2000

Currently, Detroit Kitchen Connect is working closing with Michigan Department of Agriculture & Rural Development (MDARD) to assure that the food safety, agricultural, environmental, and economic interests of the people of the State of Michigan are met through service, partnership, and collaboration. The types of food businesses that have been licensed with DKC are:

License Fee $70

Wholesale Food Processor An operation that processes, manufacturers, packages, or labels food for wholesaling. Examples include an ice manufacturer; wholesale bakery or bread plant; winery; brewery; water, juice, soft drink, or beverage plant; canning plant; flour mill, cereal plant; specialty foods processor; wholesale fish or seafood processor, wholesale fish smoking operation, fruit & vegetable packer, egg grading plant.

License Fee $175

Caterers & retailers operate under the authority of the Michigan Food Law Act #92 of 2000. All caterers food service license is required by Detroit’s Institute of Population Health. Currently, there are NO CATERERS WORKING WITH DETROIT KITCHEN CONNECT.

WHAT KIND OF FOOD LICENSES ARE REQUIRED?

Food Service Establishment

A place in which food or drink is prepared

for direct consumption through service on

the premises or elsewhere and any other

eating or drinking establishment or

operation where food is served or provided

for the public. Examples include a fixed

restaurant, coffee shop, cafeteria, short

order cafe,, sandwich shop, soda fountain,

bar, cocktail lounge, nightclub, drive-in,

private organization serving the public,

rental hall, catering kitchen, delicatessen,

theater, commissary, or similar business.

Michigan Food Law #92 of 2000

License Fee $425

Required Plan Review Fixed establishments, mobile units, vending

machine locations or special transitory

food units, if new, require a plan review

prior to licensing. Plan reviews can be

requested through the local county health

department. Temporary Food Service

licenses require an on-site inspection by

local county health departments once the

establishment is ready to operate so

applications should be made at least 30

days prior to the event.

Fee $1000 (+)

MORE LICENSES

Sales Taxes

Anyone who engages in the retail sales of

tangible personal property (defined as any

good that one can possess or exchange)

from a Michigan location needs a sales tax

license. The Michigan sales tax is 6

percent of retail sales receipts.

You many obtain a Michigan sales tax

license by completing Form 518,

Registration for Michigan Taxes. Additional

registration information for the application

process can be found by visiting the Michigan Business One Stop Web page.

Employee Identification Number (EIN)

An EIN identifies the business for federal

and state tax purposes. Many financial

institutions will not open a commercial

banking account under an assumed name

without the EIN.

Sole proprietorships with no employees

DO NOT require an EIN. This type of

business uses the owner’s social security

number for tax purposes.

An EIN form (SS-4) can be obtained at the

IRS website at http://www.irs.gov or call

800.829.4933

LIABILITY INSURANCE

Detroit Kitchen Connect requires that you carry a 1M Liability Insurance

(that names the incubator facility as “additionally insured”).

First of all, let's establish what food liability insurance means. There are many types of insurance you may

need for your food business, but as a vendor you will need liability insurance for sure! Even if you don't feel

you are a huge liability factor, it's important to be prepared for any incident.

Basically, liability insurance is what saves you money in case of a lawsuit. Liability insurance includes general liability and product liability insurance.

Many events, festivals, farmers markets require insurance just to enroll. So be prepared! What's more, they are requesting an insurance policy that covers not only you and your business, but also the event’s name and location. This is a common request and it's called having the event as an "additional insured." Additional insured can be a person or an organization. What happens with additional insured is you extend your policy coverages to protect the additional insured from a lawsuit that was caused by your negligence. Another common question is about the cost for additional insured. Some insurance companies will charge you, and with others there is no cost to add additional insured. Recommendation: Linda Paulsen Van Wyk Risk & Financial Management 616-942-5070

Average Annual Premium $500.00

LABELS MATER

What’s on a label? Food products that are

placed into commerce for marketing and sales

are required by federal and state law to have a

label on the container.

The Food and Dairy Division of the Michigan Department

of Agriculture and Rural Development (MDARD) is

responsible for assuring that food and other consumer

packages are properly labeled. The Michigan Food Law

of 2000, PA 92 of 2000, as amended, and Title 21 of the

Code of Federal Regulations (21 CFR) are the primary

Michigan laws governing food labeling.

The following summarizes general labeling requirements

for food products. In a short guide such as this, it is

impractical to attempt to answer every food labeling

questions that may arise. To help minimize regulatory

action and delays, it is recommended that each food

business owner become fully informed about the

applicable labeling laws before offering food for

distribution in Michigan.

LABEL REQUIREMENT - NAME OF PRODUCT

The common or usual name of the product is shown in bold letters and is

a statement of identity. Some foods are specifically defined in the

regulations through standards of identity and must be identified by a

standard name.

Food products not covered under standards of identity or a common and

usual name are called non-standardized foods. A descriptive name

should be used for a non-standardized product to accurately identify or

describe the food. The name of the product must be on the principal

display panel.

LABELING: NAME OF PRODUCT

Name of product

Name of company responsible

Product coding

Net weight statement

List of ingredients

Handling procedures

LABEL REQUIREMENT - NAME OF COMPANY RESPONSIBLE

If business is listed in phone directories under that name & address then

the street address may be omitted.

If phone number is on label, may omit street address

Email address alone does not fulfill this requirement

Ex: Detroit’s Fancy Food

1234 Orleans Street

Detroit, MI 48207

313-555-1212

email: russell@detroitfancyfood.com

LABELING: NAME OF COMPANY RESPONSIBLE

Name of product

Name of company responsible

Product coding

Net weight statement

List of ingredients

Handling procedures

LABEL REQUIREMENT - PRODUCT CODING

All prepackaged food must bear a meaniful lot code. This code must

allow identification of a particular lot. In some instances a sell by date

may be a lot code

Sell-by Date

Required if shelf life is less than 90 days

Color-coding or non-date codes cannot replace a “Sell-by” date

Can also be used as the Process Code

Meaniful Code

Enables positive lot identification

Can use combo of month/day/year

(051113 or 112213 or Use before 12/09/13)

LABELING: PRODUCT CODING

Name of product

Name of company responsible

Product coding

Net weight statement

List of ingredients

Handling procedures

LABEL REQUIREMENT - NET WEIGHT STATEMENT

This is an accurate statement of how much is inside the package or

container, the quantity declaration. This is stated as “Net Contents”,

which means the edible portion. As of February 14, 1994, the metric

declaration of net contents is mandatory along with the pound, ounce,

gallon, pint system. Examples of proper designation of net contents are:

Net Wt. 454g (1 lb)

Net Wt. 1 lb (454g)

The declaration must be on the principle display panel and, if applicable,

the alternate principle display panel.

LABELING: NET WEIGHT STATEMENT

Name of product

Name of company responsible

Product coding

Net weight statement

List of ingredients

Handling procedures

LABEL REQUIREMENT - LIST OF INGREDIENTS

LABELING: LIST OF INGREDIENTS

Name of product

Name of company responsible

Product coding

Net weight statement

List of ingredients

Handling procedures

• Required if products is composed of 2 or more ingredients

• Must be in descending order by weight

• Ingredients must be listed by common/usual name

• Spices and flavorings may be used generically

• Artificial flavorings must be stated that way

• Source of all fats & oils must be specified

• Preservatives must be declared

• All food colorings must be listed

• An ingredient that is made of 2 or more ingredients must be

broken down (ie. Bread: wheat flour, water, sugar)

Nutritional Facts Panel – The federal Food, Drug and Cosmetic Act requires that packaged foods bear nutrition labeling unless they qualify for an

exemption. A small business may be exempt from displaying the Nutrition Facts Panel if: (1) the annual gross sales of food to consumers is less than

$100,000, (2) it has fewer than 100 employees, and (3) sales of fewer than 100,000 units per year. Note: If any nutrient content claim (e.g., "low fat") or health claim is made on the labeling or advertising of the product, the small business exemption is not applicable.

LABEL REQUIREMENT - HANDLING PROCEDURES

Dates and Handling Instructions -- Perishable products must give

handling instructions such as “keep refrigerated” or “keep frozen”. Pack

date is the date the product was packaged. Sell by date is the last day

the product should be sold. Use by date is the last day the product is

expected to maintain top quality. Expiration date is the last day the

product should be consumed.

Number of Servings -- Unless a nutritional labeling exemption applies,

foods with more than one serving per package should state the number

of servings. In so doing, the net quantity of a serving must immediately

accompany serving size claims and be the same print size.

Name of product

Name of company responsible

Product coding

Net weight statement

List of ingredients

Handling procedures

LABELING: HANDLING PROCEDURES

When is a process review of a commercial food product necessary?

A process review is required to assure the U.S. Food and Drug Administration (FDA) that a food product sold commercially sterile will not harm the final consumer.

Low acid and acidified foods that are shelf-stable and sold without refrigeration require evaluation by a process (or processing) authority. As defined in the Code of Federal Regulations (21CFR113.83 and 113.89), “A processing authority is a person who has expert knowledge of thermal processing requirements for low-acid foods packaged in hermetically sealed containers, or has expert knowledge in the acidification and processing of acidified foods.

PROCESS REVIEW OF A COMMERICAL FOOD PRODUCT

A process review of a commercial food product is a complete evaluation of how a food product is made, including all

the steps of preparation, ingredients and packaging. The primary concern associated with canned food is that these

foods be considered safe to eat without further cooking by the final consumer. Therefore, it is critical that these foods be

processed with the greatest vigilance with regard to food safety to control toxins from Clostridium botulinum.

How does a process authority evaluate a commercial food product?

A process authority evaluates the thermal process for food and must have expert knowledge of thermal process, hermetically sealed containers, and food microbiology, and have facilities to determine a safe process or process schedule for each product.

A process schedule is designed by a process authority to deliver a “commercially sterile” (FDA) or “shelf-stable” (USDA) food product. The process schedule describes acidification, preservatives, packaging and the application of heat or cooking used to eliminate microorganisms in the product handled under non-refrigerated conditions. The microbial quality of the final food product is determined by collecting a sample and performing bacterial counts such as aerobic plate count, E.coli, coliforms, yeast and mold counts. The stability (change in water activity or acidity) of the food once canned is another

The thermal process is determined by:

Food product

Container dimensions

Time and temperature

Growth and survival of thermal-resistant

microorganisms

A PROCESS SCHEDULE

How are foods made to be commercially sterile?

Commercially sterile products can be made by several different methods. The most common processes used are

retorting—processing at high heat and pressure—and acidification of low acid foods, which also includes aseptic

processing.

Retort processing

Low-acid foods such as meat or vegetables must

be thermally processed in a retort. Retort operating

procedures are designed to provide uniform

temperature distribution under pressure using a

heating media (usually steam) throughout the

retort. Processing canned food under pressure

allows the temperature to rise to 250°F, which will

destroy the spores of Clostridium botulinum. A

retort thermal process is very complex and requires

special instruments to verify the safety of the

thermal process.

Therefore, most small food processors use an

acidified method followed by pasteurization, know as hot fill and hold.

Acidification

The hot fill and hold process can be used to process

foods that are acid or acidified. All ingredients are

thermally processed in a steam kettle to a temperature

of at least 180 ̊F, then transferred to clean containers,

sealed and held for a pre-determined time. Reaching a

temperature of 180°F is critical to push out any air

remaining within the container; as it cools, a vacuum is

formed, resulting in a hermetically sealed container.

Acid or acidified foods must have an acidity of less

than 4.6 pH at equilibrium (the point at which pH will no

longer change). This acidity level will

control Clostridium botulinum, which is the micro-

organism of concern for canned food. The acidity

equilibrium point may be reached immediately, or it

may take several days after processing for it to be

reached. The product must be stored under

refrigeration until the equilibrium point is reached.

MAKING FOODS COMMERCIALLY STERILE

Who Needs One?

If you are canning any type of

food, such as, pickles, relish,

salsa’s, sauces, etc. that is

Shelf Stable.

Shelf Stable is any product that

does not require temperature

control until opened.

Note: Jams/Jellies are not

required to file a process

schedule

Why You Need It?

“All operators of retorts, processing systems, and aseptic processing and packaging

systems, and container closure inspectors shall be under operating supervision of a

person who has attended a school approved by the Commissioner for giving instruction in

retort operations, processing systems operations, aseptic processing and packaging

systems operations, and container closure inspections, and has been identified by that

school as having satisfactorily completed the prescribed course of instruction.”

So you can be sure that your

recipe preparation and cooking

(time & temperature) is safe.

Need to prove that the product will

remain safe to eat for the entire

time that the food item is on the

shelf.

Note: MDA is concerned with food

safety only. You also need to be

concerned with food quality

Where Can I Go To School?

The U.S. Food and Drug Administration has selected Michigan State University as one of the authorized schools to present the Better Process Control School. Students who successfully complete this course will meet FDA certification requirements.

Four-day Acidified

Low-Acid Canned Food

$730.00

BETTER PROCESS CONTROL SCHOOL

While the primary function of food packaging is to protect

your product, the primary function of food packaging

design is to attract. Your package is your brand

ambassador - it should sell itself. This means you need to

have a strong brand identity and packaging that

communicates information about your product clearly,

concisely, and relevant to your target audience.

Packaging materials What materials will allow for

maximum product freshness and protection?

Packaging Construction Will a flexible or rigid

container support your product? How much space do

you need for messaging?

Ease of which it can be packed into outer

containers (secondary packaging) ) Will the shape

or size prevent you from easily shipping your product

to retailers?

Shelf life extension through packaging How long

might your product sit on the shelf before consumer

consumption?

Convey Information What are the ingredients,

product benefits, considerations, brand identity?

PACKAGING DESIGN

MARKETING YOUR PRODUCT

Now that you are licensed, how

do you get your food product

into the market place?

Start small

Local community markets

Farmstands

Gift stores

Gourmet Food Stores

Local Grocery stores

Detroit Eastern Market

Internet Sales

If you want to help grow your business and the good

food movement in Detroit, and you fit the membership

criteria, you should join the FoodLab Detroit

community by submitting your application.

Strengthen your own Good Food Business,

including:

Listing in FoodLab Member Directory and ability to

promote your business through the website and social

media.

Connect with and help grow a diverse Good Food

Business Community, including:

In-person opportunities to build relationships with other

good food entrepreneurs at Food for Thought and

other FoodLab events; Opportunities for mentorship

and to serve as a mentor.

Support Detroit’s Good Food Movement,

including:

Speak on the role of locally owned, triple-bottom line

businesses in Detroit; Advocate for good food business

friendly policy at the city, state and national levels;

Connect with Good Food Movement organizations in

Detroit, in the region, and beyond.

Membership Fees Apply

BECOMING A MEMBER OF FOODLAB DETROIT

THANK YOU

Contact information: Devita Davison

Detroit Eastern Market 2934 Russell

Detroit, MI. 48207 (313) 833-9300

Extension 101 www.detroitkitchenconnect.com

Video:

http://www.detroitnews.com/VideoNetwork/2566263512001/

Connecting-food-entrepreneurs-to-commercial-kitchens