Regulatory Environment For Kudler Fine Foods

Running head: REGULATORY ENVIRONMENT FOR KUDLER FINE FOODS

Regulatory Environment for Kudler Fine Foods

University of Phoenix

Regulatory Environment for Kudler Fines Foods

Due to the decisions made to use local growers of organic products and start a catering service, Kudler Fine Foods has decided to close three departments for refurbishing and simultaneously lay-off workers within each department. For the focus of this paper, Kudler will be analyzed concerning any legal obligations the store may have toward the employees, supplying contractual agreements with local organic farmers, product liability, and regulatory implications.

Obligations to Employees

Kudler Fine Foods (KFF) is located in California where they support the "employment-at-will" policy. Per the KFF handbook (2004):

KFF has to right to add new policies, change policies, or cancel policies at any time. The only policy that will never be changed or canceled for any reason is the employment-at-will policy. The employment-at-will policy allows the employee or KFF to terminate the employment at any time for any reason (para. 2).

This statement reiterates that legally, Kudler does have the right to shut down the three departments, (a) confectionary, (b) deli, and (c) on-site prepared meals for the three months needed to re-establish the business.

Concerns Kudler will need to recognize are the possible, if any, moral obligations to the employees being laid-off. For example, (a) Will KFF offer temporary re-assignment to these employees in other areas of the business, (b) Are the positions in question guaranteed to be replaced with the same employees, (c) Will a new application process be implemented once refurbishing is complete, (d) Will there be compensation packages offered to employees who are not rehired? Possible resolutions to these concerns are, re-assigning work loads, retraining for new positions, guaranteed holds for employees wishing to return after the closing of the department, and if not returning, a compensation package for those employee who qualifies.

Contracting Local Organic Growers

"The law of contracts deals with the enforcement of promises....The law of contracts sorts out what promises are enforceable, to what extent, and how they will be enforced" (Mallor, Barnes, Bowers & Langvardt, 2003, p. 222). Contracts are private agreements between two or more parties that usually involve one party paying the other for a supplied service or for another service. The local organic growers have recently approached Kudler with requests for contracts to assist in the security regarding where the produce is to be sold. By entering into a contract with the growers, each party is accepting the legally binding, and voluntary agreement.

This type of scenario would be beneficial for KFF, as long as the contracts meet the legal requirements for the state and satisfy both parties' needs. Kudler would be helping to secure a partnership, professionally and personally, with the local farmers and local community, while improving its business needs. The stores are not as popular as large-chain grocery stores; therefore, using local farmers is more cost effective then purchasing from outside the states or in massive bulk. It will be necessary for the local organic farmers to continuously supply each store with adequate amounts of produce to meet the publics growing demand. In 2005, the United States Department of Agriculture reported, "in 2004, organic food and beverage sales were $10.9 billion, an increase of 18 percent from 2003" (Gold, 2005, p.4) showing the public increased interest in purchasing things organic.

Negative drawbacks to local contracts with organic farmers are if a natural disaster were

to take place or Kudler found its stores going out of business. For both parties to be satisfied, the contracts will need to have clauses included that cover the "what if's" of for natural disasters. The contracts would also include specific instructions of which area of the local community is accessible for production, desired produce, amounts of produce, and general understanding of not purchasing from the competition. To protect the local growers a clause may also be included to cover the costs if Kudler were to close the shops completely. Another form of protection for all parties involved is requiring that the local growers participate in the certification process introduced by the USDA in 1990 for packaging and selling of goods and services.

Organic trade warrants that products carry a certification mark, which guarantees genuineness in the production system and conforms to the standards required. This guarantees consumers that the products they are purchasing are genuinely organic and that the integrity of the product is maintained from farm to plate (Eaternal, 2007).

In 2002, the USDA ruling for certification was not required on small organic farmers and processors (USDA, 2006) however; this would be a positive to push the farmers to obtain for the safety and success of all parties. Kudler could accept the cost for such certifications if the farmers rejected the concept.

Product Liability Implications

Kudler does have a responsibility to the consumers for the products being sold in the stores. If the products do not meet the USDA qualifications for organic produce and Kudler displays them as such, KFF will be held liable for misrepresentation. The certified USDA label should be displayed by the local farmer on each piece of produce to be sold. This allows for the local growers to be held liable for any complaints by the consumers, not Kudler. The USDA and the National Organic Program (NOP) suggests that retailers selling organic products (a) keep proof of organic certification for direct suppliers, (b) contract with private label suppliers, to confirm manufacturers and the products meet the NOP requirements, and (c) keep pest-management or sanitation records from the stores and farmers (Food Marketing Institute, 2002, p.6). Kudler is also responsible for identifying the manner is which each organic product is handled or processed prior to reaching the store along with the preparation and display steps taking while in stores prior to purchasing.

Regulatory Implications

Organic produce does