want it to look like THEY have nothing to do with it...so it doesn't cause complaints from their buyers on the retail end of it
It sounds like a reasonable arrangement but the above statement would give me pause for concern. It would seem to me that your potential partner doesn't have an issue with circumventing an agreement he has in place with retailers to not sell the product.
If a manufacturer that I buy from hid behind a front to sell into the same markets as me, I would be plenty upset. In a business agreement like you describe, trust is paramount, and if your potential partner has shown that he is willing to be dodgey with others, what makes you think he won't attempt the same type of thing with you? </devils advocate>