The Regulator Reads the Label Too — NAFDAC, SON and the Named Party

The private-label seller negotiates with one party. She signs one document, with the factory, and that document tells her what she owns, what she pays for, and who carries what if something goes wrong. It can be a thorough contract, carefully drawn, and it will still leave untouched the relationship most likely to end her business — because the party who ends businesses was not at the table, is not bound by anything either side agreed, and does not read contracts at all.

The agreement allocates responsibility between the two parties who signed it. The regulator allocates it by reading the label.

This sub-cluster opened on a structural observation: a private-label arrangement has four parties and two signatures. The seller and the manufacturer sign. The consumer and the regulator sign nothing, are bound by nothing, and are precisely where the failures happen. The essay on liability took the first of those unsigned parties. This one takes the second, and between them they complete the thought the sub-pillar started.

The reason the regulator cannot be contracted around is not that regulators are hostile to private arrangements. It is that regulatory duty attaches by function rather than by agreement. A regime does not ask who the parties decided would be responsible; it asks what each party is doing. It identifies manufacturers, importers, distributors and advertisers by what they do, and it identifies the person whose name and address appear on the product by the fact that they appear there. Being named on a pack is not a marketing decision that the law happens to notice afterwards. It is the act by which a business tells the state which role it occupies.

Which produces the specific error this essay exists to correct. The seller believes the factory is the regulated party and she is the customer. In the arrangement she has actually built, the factory is a regulated party, and so is she — often more visibly, because the state can find her without a site visit, and so can everyone else.

Two agencies do most of the work on consumer goods in Nigeria, and which one applies is decided by what the product is, not by how the business describes itself.

NAFDAC — the National Agency for Food and Drug Administration and Control — regulates what it calls regulated products: foods, drugs, cosmetics, medical devices, packaged water, chemicals and detergents among them. For those categories, registration is not an accreditation a serious business seeks in order to look serious. It is the condition of being allowed to sell at all, and a regulated product on the market without it is not an unpolished operation but an unlawful one.

The Standards Organisation of Nigeria takes much of what sits outside that boundary — manufactured and industrial goods, assessed against Nigerian Industrial Standards. Its conformity programmes run along a line that matters enormously to a private-label seller and is almost never noticed at the point of decision: one scheme addresses goods manufactured locally, another addresses goods arriving as imports. A seller who begins with a Nigerian factory and later moves the same product to an overseas supplier because the unit cost improved has not merely changed vendors. She has changed which regulatory pathway her product travels on, and the paperwork that made the first arrangement lawful describes an arrangement that no longer exists.

The boundary between the two agencies is drawn, in practice, through product classification — the tariff headings under which goods are declared — rather than through anything the business writes on its website. This has a consequence sellers consistently underestimate. Wording on the pack can move a product across the line. A preparation sold as a cosmetic is a cosmetic; the same preparation sold with a claim that it treats a condition is describing a therapeutic product, and a business that reached for a stronger sentence to improve its conversion rate may have quietly applied to a different regime.

The category is fixed by what the product is and what the label says it does — never by which agency the founder would prefer to deal with.

Each of the following is a place where the arrangement meets the regulator, and each ends in the same question. The question is not what the contract says. It is who the state will call.

An earlier essay in this sub-cluster set four registers against each other — the companies register, the trade marks register, the domain registrar and the platforms — and argued that only one of them is ownership. There is a fifth register, and it was left out of that comparison because it does something different from all four.

A product registration is not ownership of the brand. It is permission to sell a particular thing, made in a particular place, under a particular name. But it behaves like an asset in every way that matters commercially: it takes months and money to obtain, it stands in the name of one party, it is transferable only through a defined process with the agency's involvement, it runs for a fixed term and lapses if nobody attends to the renewal, and a competitor cannot use it. A business that holds it can sell tomorrow. A business that does not is asking permission from whoever does.

Which places it alongside the two assets this sub-cluster has already taken apart. The mark has a register and a clear answer about who holds it. The formulation has no register at all, which is why the question of who owns it has to be settled in writing before it is ever contested. The regulatory registration sits between them: there is a register, the answer is knowable in an afternoon, and almost nobody in a private-label arrangement has ever looked.

It fails the same way the formulation does. Nobody asks whose it is while the relationship is working, because while the relationship is working the question has no consequences. It acquires consequences on exactly two occasions: when the seller wants to leave, and when the regulator writes.

None of what follows is difficult, and none of it is available later on the same terms.

Settle in the agreement who applies, and in whose name. The supply contract should say that the seller is the applicant, that the registration vests in and remains the property of the seller, and that the manufacturer will provide the invitation letter, the facility documentation and any technical information the application requires — including on termination, when the seller is moving the product elsewhere and the factory's enthusiasm can be expected to have changed. A factory that objects to this clause is telling you something useful about how it understands the relationship.

File the mark before the product timeline is set. Since the registration file wants evidence of the name at the Trade Marks Registry, the trade mark stops being a parallel workstream and becomes the critical path. Founders routinely order stock while treating the filing as administrative tidying to be done when there is time. The sequence runs the other way.

Have the label read as a legal document before the artwork is approved. Not proofread — read, by someone asking which claims require support, which particulars are mandatory, and whether any sentence on the pack has moved the product into a different regime. Artwork is expensive to change once it is printed and expensive in a different way once it is registered.

A seller who is not the named party has not avoided the regulator. She has only arranged to hear from it last.

The woman in the opening had broken no rule. She had made a decent product, sold it honestly, and paid her invoices on time. What she had never done was ask whose name was on the file that permitted her to sell it — and by the time that question was finally put to her, it was being put by the one party to the whole arrangement who had never signed a thing.

This publication is educational and analytical. It describes how legal and commercial structures work; it does not advise on any particular matter, and nothing here should be relied upon as advice on a reader’s own affairs. The author holds commercial interests in the brand-building and private-label sector examined by this series.