Sprouts Farmers Market 2015 Annual Report Download - page 21

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FDA and USDA Enforcement. The FDA has broad authority to enforce the provisions of the Food,
Drug and Cosmetic Act (referred to as “FDCA”) applicable to the safety, labeling, manufacturing and
promotion of foods and dietary supplements, including powers to issue a public warning letter to a
company, publicize information about illegal products, institute an administrative detention of food,
request or order a recall of illegal products from the market, and request the Department of Justice to
initiate a seizure action, an injunction action or a criminal prosecution in the U.S. courts. Similarly, the
USDA’s Food Safety Inspection Service is the public health agency responsible for ensuring that the
nation’s commercial supply of meat, poultry and egg products is safe, wholesome and correctly labeled
and packaged.
Dietary Supplements. The FDCA has been amended several times with respect to dietary
supplements, in particular by the Dietary Supplement Health and Education Act of 1994 (referred to as
“DSHEA”). DSHEA established a framework governing the composition, safety, labeling, manufacturing
and marketing of dietary supplements, defined “dietary supplement” and “new dietary ingredient” and
established new statutory criteria for evaluating the safety of substances meeting the respective
definitions. In the process, DSHEA removed dietary supplements and new dietary ingredients from pre-
market approval requirements that apply to food additives and pharmaceuticals and established a
combination of “notification” and “post marketing controls” for regulating product safety, however, non-
dietary ingredients in a dietary supplement remain subject to the FDA’s food additive authorities. DSHEA
also empowered the FDA to establish binding good manufacturing practice regulations governing key
aspects of the production of dietary supplements.
Food and Dietary Supplement Advertising. The FTC exercises jurisdiction over the advertising of
foods and dietary supplements. The FTC has the power to institute monetary sanctions and the
imposition of consent decrees and penalties that can severely limit a company’s business practices. In
recent years, the FTC has instituted numerous enforcement actions against dietary supplement
companies for failure to have adequate substantiation for claims made in advertising or for the use of
false or misleading advertising claims.
Compliance. As is common in our industry, we rely on our suppliers and contract manufacturers to
ensure that the products they manufacture and sell to us comply with all applicable regulatory and
legislative requirements. In general, we seek certifications of compliance, representations and warranties,
indemnification and/or insurance from our suppliers and contract manufacturers. However, even with
adequate insurance and indemnification, any claims of non-compliance could significantly damage our
reputation and consumer confidence in products we sell. In addition, the failure of such products to
comply with applicable regulatory and legislative requirements could prevent us from marketing the
products or require us to recall or remove such products from our stores. In order to comply with
applicable statutes and regulations, our suppliers and contract manufacturers have from time to time
reformulated, eliminated or relabeled certain of their products and we have revised certain provisions of
our sales and marketing program.
Employees
As of January 3, 2016, we had more than 20,000 team members. None of our team members are
subject to collective bargaining agreements. We consider our relations with our team members to be
good, and we have never experienced a strike or significant work stoppage.
Corporate Offices
Our principal executive offices are located at 5455 E. High Street, Suite 111, Phoenix, Arizona
85054. Our website address is www.sprouts.com. The information on or accessible through our website is
not incorporated by reference into this Annual Report on Form 10-K or in any other report or document
we file with the Securities and Exchange Commission (referred to as the “SEC”).