Why Your Signed Contract Doesn't Match Your Trade Plan (and What to Do About It)
Here's a moment plenty of Founders selling through distributors know well. Your KeHE payment lands, one deduction is bigger than anything you remember approving, and your food broker contract says one number while your trade plan says another. Nobody on your team can say which one is right… and I promise it's more common (and more fixable) than it feels.
Fred Schroeder worked at Procter & Gamble and Coca-Cola's Minute Maid division, then led two trade promotion software companies, and today he's a fractional trade manager for small brands. In the second of our trade spend webinars with Fred Schroeder (August 19, 2026), he estimated that the contract and the plan disagree on well over a third, probably close to two-thirds, of promotions. Insights like that are exactly why I started this series with Fred, because after our first few conversations I thought, holy cow, other Founders need to hear this. The good news is that the fix comes down to two checkpoints y'all can set up this week, and I'll walk you through both.
Why Your Food Broker Contract Rarely Matches Your Plan
Before any promotion goes live, your broker or someone on your team fills out a food broker contract. That paperwork is where the gap opens, and Fred's webinars point to four reasons every brand needs a process to close it. Here are the first three, and the fourth gets its own section below:
Teams move fast and skip a formal check, so when the retailer asks for more money and the event goes back for reapproval, the revised version gets signed before anyone holds it up against the original plan.
Distributors quote costs in percentages, and a percentage costs a different amount depending on the price it's multiplied against. Ask your head of sales, your bookkeeper, and your broker what a 20% chargeback costs you per case, and you'll likely hear several answers. As Fred puts it, money shows up with a dollar sign and a decimal point, which is why I translate every percentage into dollars.
Sales and finance often work from different sets of numbers, so the deal sales negotiated and the budget finance tracks drift apart quietly.
Why Do Overlapping Trade Years Cause Deduction Mismatches?
Overlapping trade years are the fourth reason, because most brands juggle two trade years at once, and sometimes three. Right now, you're probably locking in 2027 deals while 2026 deductions are still rolling in, and one promotion can take up to 20 months from approved plan to cleared deduction.
Fred was clear that everyone involved is usually acting in good faith and that the gap comes from a missing process. Every good process starts with clean records, and our CPG accounting team tracks deductions and distributor fees so the numbers you check against your plan are already in one place without you spending your days buried in numbers.
The Real Cost Hiding in a Distributor Percentage
CPG companies spend between 11% and 27% or more of revenue on trade promotions, according to the Promotion Optimization Institute, so the gap between a chargeback's stated percentage and your real trade deductions adds up quickly.
MCB stands for manufacturer chargeback, a promotional discount you fund, which the distributor passes to the retailer and then deducts from your payment. Its cousin, the OI, is an off-invoice allowance, a price cut the distributor takes straight off your invoice during a set window.
Fred's worked example of a 10% MCB on a $40 case is one of my favorite bits of trade math, so let's get on the case (the $40 one):
What the contract seems to say: 10% × $40 = $4.00
What reaches the retailer: 10% × $43.20 (your $40 plus an 8% delivery upcharge) = $4.32
What you're billed: 10% × $56.00 (your $40 plus a 40% wholesale upcharge) = $5.60
The retailer's share is figured on your price plus the 8% delivery upcharge the distributor charges a retailer like Whole Foods. Your bill is figured on the distributor's published wholesale price, the one its smallest stores pay, which typically sits 35% to 40% above your case price. You pay $1.60 more per case than the contract seemed to promise.
Pull your current contract, find the MCB line, and multiply it by the distributor's wholesale price. Knowing that number before you sign the next one gives you grounds to ask for scan-based terms, where you pay an agreed amount for each unit sold at the register.
The KeHE Contract That Took Three Requests to Explain Itself
Fred reviewed a KeHE contract for a brand he works with, and it described the charges in general terms. Wherever a real number belonged, the contract pointed to an attachment, the brand had to ask three times before it arrived, and the team still had to calculate the dollar figures itself. Even a contract that reads like a finished document can send you somewhere else for the figure you care about most.
How Do I Read a KeHE Distributor Contract?
Read a KeHE distributor contract with a pen in hand, circling every reference to an attachment, schedule, exhibit, or addendum, and get each one before you sign. Asking a third time takes a little ganas, and it's worth it. Treat every food broker contract the same way.
Your own broker agreement deserves the same clarity, and the Montana Department of Agriculture's guidance on what a food broker agreement should spell out lists commission, reporting frequency, and limits on a broker's authority as terms to agree in writing. Our breakdown of the gross-to-net realities of UNFI and KeHE explains the double markup behind MCB charges.
How to Catch a Food Broker Contract Mismatch
The fix is two checkpoints for every key-retailer promotion, plus scan-based terms written into the contract. Ask the retailer for scan terms before anyone signs, because the retailer is the one who agrees to them. With a scan, the distributor bills you the exact amount the retailer received plus a deduction fee of a couple of percent. Because an MCB bills against the wholesale price and a scan bills against the amount you gave the retailer, every promotion you move to scan sends more of your trade dollars to the shopper.
Checkpoint 1: Does the Signed Contract Match Your Trade Plan?
The first checkpoint happens when the signed food broker contract comes back, before the event goes live. Lay it next to your approved plan, compare dates, items, discount per unit, and fees line by line, and settle any difference with your broker before it can become a deduction.
Checkpoint 2: Did the Promotion Actually Happen in Stores?
The second checkpoint confirms retail execution with two quick looks, one 60 days before the event to make sure the retailer has picked it up, and one the week of the event to see that it's on the shelf and in the ad as planned. One brand Fred had just started working with planned four promotions at each of 15 retailers, and his review of the year's data showed only 22 or 23 of those 60 had happened. Without checkpoints, a brand only finds that out at year end, after budgeting for events that never took place. The 60-day look leaves time to reschedule a missed event, the week-of look gives you proof if a chargeback needs reversing, and y'all can cover both from one spreadsheet.
Checks like these are easiest to set up before your books get complicated. UNDONE had us build a clean chart of accounts and a three-statement financial model before its U.S. launch, giving the team a clear view of cash runway and margins. Its U.S. back office was up and running in under three months.
What a Broker Agreement Should Actually Spell Out
Fred says there really aren't many bad brokers. Most friction traces back to objectives, deliverables, roles, and responsibilities nobody defined at the start, which makes it a scoping problem far more often than a performance one.
Your broker agreement's gotta name the person who signs off on a finalized plan before the broker turns it into a contract with the retailer, and the person responsible for confirming in the field that each promotion actually happened. Plan sign-off belongs with you or your head of sales, and field confirmation can sit with your broker or your field sales team, as long as both names are in writing. Naming both people gives trade promotion planning a clear owner at each step, from the signed plan to the store shelf.
Check the Bill Before the Charge Clears
Fred estimates that more than 90% of trade promotion deductions accurately reflect the signed contract, so a contract you've checked against your plan, and a promotion you've confirmed on the shelf, set you up for deductions that match both.
We plug into your distributor portals and accounting system, log and verify every chargeback against the promotion it belongs to, and work through the back-and-forth with distributors when one doesn't match. Those clean numbers feed your margin reporting, your cash forecast, and, when you're ready to borrow, a lender-grade loan package.
Send me the deduction nobody on your team can explain, and I'll be stoked to trace it with you. Schedule a call with Cultivar to check whether your signed contracts already match your approved plans.
Frequently Asked Questions
What's the Difference Between a Trade Promotion and a Deduction?
Your trade promotion is the deal you plan and pay for, and the deduction is the cleanup afterward, when a distributor or retailer takes the promotion's cost out of your payment. Fred calls them "two completely different things."
What Should I Do if a Promotion I Paid For Never Happened?
Send your broker or distributor the proof from your week-of-event check, such as a screenshot of the retailer's online ad with your item missing from it, and ask for the chargeback to be reversed. Fred has seen retailers change an ad or cut items from a promotion, often by accident.
Do I Need Trade Promotion Software to Sync My Contracts and Plans?
Most brands can wait. Fred sees brands start looking at trade promotion management software at around $30 million to $40 million in revenue. Until then, he recommends a deduction clearing service, which usually recovers more in repays than it costs within one to two years.
Related Resources
Why Trade Spend Software Alone Won't Protect Your Margins explains why software can sort your deductions, but a person still has to judge which claims are valid.
How Much Is $1 of Deduction Dispute Really Worth? shows how winning back 5% of gross revenue in disputed deductions can add roughly 60 days of cash runway.
Reclaiming Your P&L opens on a $2.17 check for $20,000 of product and makes the case for automating deduction recovery.
