I am a lawyerThere are a number of issues running wild in this thread, maybe I can shed a little light. What I'm going to say applies to most, but not all jurisdictions.
1. Copyrighting, Trademarking, and Name Protection: As I understand it you're interested in protecting your company's name from others copying it or customers using it without permission. The simplest way to do this is to do a name search at your County Recorder and file a DBA (aka "doing business as," aka "Fictitious Name Statement." When your DBA is granted you will also (probably) receive a "Tax ID," which will allow you to purchase items from some sellers without paying sales tax. A good place to start your research as to where to go, how to do it, etc., is at your State's Secretary of State's website. This should be enough to protect your trade name. If you have a logo or some other trademark you're worried about someone stealing, the proposition becomes a little more complicated. Don't waste a lot of dough protecting something that didn't cost you a lot of money to begin with or isn't making you a lot of money.
It's not easy to control a simple name like "Tracy's." People can use their own names provided they're not named Mickey Mouse. Nobody beats Disney. Which raises another issue. Unfortunately intellectual property rights are sometimes no better than the amount of money you have to protect them. It's a matter of business efficiency, something the court's favor.
2. Incorporating, LLC, LLP, and other business forms: Good idea if you can afford it and you have assets you want to protect. There are discount incorporatos and self-help websites for incoproating in most states. You usually do not need an attorney to set up a "closely held corporation" or other similar business form. If you have significant assets, I suggest you do consult an attorney so as to find the best form for you and to make sure you do not pick up tax liabilities unnecessarily.
A corporate or similar business form allows you to do some retirement planning, accelerate depreciation, take a "tax loss," write off part of your resides, and move some money around creatively -- at least for the first couple of years. You have to show a profit three years out of five to keep the fancy stuff going.
At the level you're thinking about you'll probably get more and better information from your accountant than you'll get from using an attorney. If you don't have an accountant we're probably putting the cart before the horse. Making money is always the first step.
3. Insurance: If you are going to remain a sole proprietor or other simple business form, your homeowner's insurance probably covers you. Consult your agent. If you are not a homeowner, you need to consider whether you have assets to protect. If you do not, it's more likely that the retailer will be sued instead of you. If you're in some sort of intermediate position, consult an insurance agent. You want to make sure your coverage extends beyond simple liability and includes a "duty to defend" on the part of the insurance company. This means that if you do get dragged into court, they've got to provide an attorney -- they can't just write a check for the limit of the policy and leave you in the lurch.
If you plan on hiring employees you absolutely need employers' insurance and whatever passes for workers' compensation insurance in your jurisdiction. Do not think, even for a second, of going bareback.
If you're a corporation or other anonymous business form you need sufficient tort coverage to cover "foreseeable eventualities." Otherwise, you waste your time and money starting the whole thing. If you're sued and don't have adequate insurance the Court will "pierce the corporate veil," and the Plaintiff will be permitted to go after your personal assets.
4. Contract with restaurants and other retailers: I'm not sure what rights you want to protect, or what obligations on the part of your customers you want to enforce. Contracts are all about mutuality. It's unlikely a retailer will consider entering a written contract with you unless the relationship matures to the point where they would suffer damage if you decided to stop providing for them. At first blush, your positions seem too unequal and rights and obligations so nebulous to require anything formal. For the time being, your recourse is probably "Small Claims Court" if anything goes wrong -- if, for instance, they stiff you on a $1,000 worth of baked goods. When you're doing enough business to get into a court of general jurisdiction, someone wants your services exclusively, or something equally earth shattering, then it's time to start thinking about contracts. 12 cakes, 12 pies, 48 loaves and $400 a week? No.
Hope this helps,