EPR Liability in a Franchise Bottling Model: Where the Brand Goes, the Obligation Follows

FileMyEPR.in | EPR Compliance Insights Series

Case Study No. 3 | Plastic Waste Management | Franchise & Bottling Structures

Abstract

This case study examines the allocation of EPR obligations in a franchise bottling model used widely in the packaged drinking water and alcohol beverage sectors in India. The brand owner in this case supplies plastic bottle preforms to regional contract manufacturers who blow, fill, label, and distribute the product entirely independently. The brand owner is not involved in any product inventory or distribution activity. The case establishes that under the Plastic Waste Management Rules, 2016, the EPR obligation follows the brand not the entity that physically bottles, fills, or ships the product. It also examines the practical implication for brand owners operating at national scale through large franchise networks.

1. Background and Regulatory Context

Under the Plastic Waste Management Rules, 2016, as amended, the EPR obligation for plastic packaging attaches to the entity that places plastic packaging into the market under its brand name. This is irrespective of whether that entity is the manufacturer of the product, the operator of the filling or packaging line, or the entity that physically distributes it to retail consumers and places the products in the market.

Rule 3(1)(b) of the PWM Rules,2016 defines a brand owner as any person who sells any commodity under a brand, whether or not that person is the manufacturer of the product or the packaging.

This definition was deliberately framed broadly to prevent the EPR obligation from being diluted or deflected by separating the brand ownership function from the manufacturing and distribution function, which is a common commercial structure across India’s consumer goods and beverages sectors.

2. Structure of the Franchise Bottling Model

The franchise bottling model examined in this case operates as follows.

The brand owner owns the brand, controls the product formulation and quality standards, and supplies plastic bottle preforms (unblown plastic blanks, prior to the bottle-forming process) to a network of regional packaging and distribution centres. The brand owner does not operate filling lines, does not distribute the product, and does not record sales of the packaged drinking water/ beverage in its books. The regional partners, who are the contract manufacturers handle all of that.

The regional contract manufacturers receive the preforms, blow them into finished bottles using their own machinery, fill the bottles with water from local sources, meet the mineral formulation and quality standards mandated by the brand, affix the brand’s label, and distribute the filled product to retail consumers in their territory.

The brand’s name is on every bottle. The brand owner’s name appears on every label. But the brand owner never touched the water, never operated a filling line, and never dispatched a single consignment.

3. The Compliance Question

When CPCB considers this arrangement and asks who is the obligated entity under EPR for the products with plastic packaging placed into the market the answer is unambiguous.

The brand owner.

The brand owner meets the definition under Rule 3(1)(b): it sells a commodity the bottled water under its brand name. The fact that the physical bottling, filling, and distribution is carried out by contract manufacturers does not alter the brand owner’s status as the brand owner under the Rules and consequently does not relive the brand owner of its EPR obligations.

However, this does not mean that the contract manufacturers have no obligations under the PWM Rules, 2016. The regional contract manufacturers carry their own registration obligations as producers under the Rules, they are required to register on the CPCB EPR portal and report their plastic packaging consumption.

4. Legal Analysis

The principle established in this case has a consequence that is frequently misunderstood in franchise-heavy sectors: EPR targets for a brand cannot be disaggregated to franchise partners/ contract manufacturers, even if those partners do all of the physical packaging and distribution.

Under the Plastic Waste Management Rules, the aggregate plastic tonnage placed into the market under a brand across all regional franchise partners/ contract manufacturers operating under that brand, across every filling location in the country accrues to the brand owner’s EPR target. Not to each partner’s individual target nor to a combination of the two.

The practical implication is significant. A brand owner operating through fifty regional franchise partners across India must account for the total volume of plastic packaging placed into the market by all the said fifty partners in its EPR return. It cannot assume that each partner’s separate registration and compliance would address the brand owner’s obligation.

This is the structure in which the Plastic Waste Management Rules place the obligation: on the brand, not the bottle-filler.

The contract manufacturer’s separate registration exists to ensure accurate reporting of physical packaging volumes. Its obligation is limited to just reporting. The obligation to meet the EPR target for those volumes, as mentioned above, sits with the brand whose name is on the plastic packaging.

5. Risk Mitigation Framework

5.1 For Brand Owners in Franchise Bottling and Distribution Models

The brand owners have to treat the entire volume of plastic packaging placed into the market under their brand name across all franchise partners and/or contract manufacturers, all regional bottling centres, all distribution territories as their EPR obligation. Targets are not to be disaggregated by partner or territory and the brand owners should not rely on the partner registrations to cover their EPR targets and obligations.

The brand owners are mandated to obtain plastic packaging consumption data from each franchise partner / contract manufacturer as part of regular operational reporting. This data is not only required for EPR compliance; it is also the basis on which CPCB may assess the brand owner’s obligation.

5.2 For Regional Contract Manufacturers and Franchise Operators

Regional contract manufacturers/ franchise operators are required to register on the CPCB EPR portal as a producer. Their obligation is to report plastic packaging consumption accurately.

It is critical to note that contract manufacturers should not accept any representations from the brand owner to the effect of having to discharge the liability on behalf of the brand owner. Such representations accepted and subsequently discharged, will not account for discharge of obligations and meeting of targets by the brand owner and the brand owner continue to remain obligated under the rules.

5.3 For Compliance Teams Across Franchise Networks

The easiest risk mitigation framework would be to design the EPR data collection process to aggregate packaging volumes at the brand owner level. The format should be created in a manner such that it is a mechanism by which each franchise partner’s consumption data flows to the brand owner’s compliance function in a timely, auditable format.

The compliance teams have to verify that the brand owner’s EPR registration correctly captures total market volumes and not just direct sales. Franchise and contract manufacturer’s bottling volumes, which may never appear in the brand owner’s own sales records, must still be reported.

6. Broader Implications

The packaged drinking water and alcohol beverage sectors in India are among the largest users of plastic packaging, and franchise or regional bottling models are common across both. The compliance exposure examined in this case is therefore widespread.

The same logic applies to any sector where a brand owner licenses its brand to regional operators who package and distribute products independently such as regional food and beverage producers, licensed bottlers, co-packing arrangements where the product is shipped entirely by the packer.

In each case, the legal question remains the same: whose brand is on the packaging? That entity carries the EPR target. The physical act of packaging, wherever it occurs and whoever performs it, does not transfer the obligation.

7. Conclusion

In a franchise or contract bottling model, the EPR obligation belongs to the brand owner not to the entity that blows the bottle, fills it, or ships it.

The definition of brand owner under the Plastic Waste Management Rules, 2016 is deliberately broad. It captures every entity that sells a commodity under a brand, regardless of its involvement in the physical production or distribution of that commodity.

The obligation goes everywhere the brand name goes. Not where the bottle is filled.

This case study has been prepared by FileMyEPR.in for educational and informational purposes. All identifying details have been anonymised. This document does not constitute legal advice. For compliance-specific guidance, contact the FileMyEPR.in advisory team.