Signed by Governor Phil Scott

Vote Smart's Synopsis:

Vote to pass a bill that amends state beer franchise contracts.

Highlights:

• Prohibits a manufacturer or certificate of approval holder from requiring a wholesale dealer to agree to any condition, stipulation, or provision limiting the wholesale dealer’s rights to sell the product of another manufacturer or certificate of approval holder (Sec. 3).

• Defines “certificate of approval holder” as a holder of a certificate of approval issued by the Liquor Control Board, that produces or distributes a total annual volume of not more than 50,000 barrels of malt beverages and whose products comprise 3 percent or less of a wholesale dealer’s total annual sales of malt beverages by volume (Sec. 5).

• Defines “franchise” as an agreement governing a relationship between a wholesale dealer and a certificate of approval holder or manufacturer that was entered into on or after January 1, 2019 and has existed for at least one year, and must have one or more of certain specified characteristics (Sec. 5).

• Defines “manufacturer” as a licensed manufacturer that produces a total annual volume of not more than 50,000 barrels of malt beverages and whose products comprise 3 percent or less of a wholesale dealer’s total annual sales of malt beverages by volume.

• Specifies that the provisions of section 5 apply to any franchise between a wholesale dealer and either (Sec. 5):

• A certificate of approval holder producing or distributing a total annual volume of not more than 50,000 barrels of malt beverages and whose products comprise three percent or less of the wholesale dealer’s total annual sales of malt beverages by volume; or

• A manufacturer producing a total annual volume of no more than 50,000 barrels of malt beverages and whose products comprise 3 percent or less of the wholesale dealer’s total annual sales of malt beverages by volume.

• Authorizes the terms of a written franchise between the certificate of approval holder or manufacturer and the wholesale dealer to govern the right to cancel, terminate, refuse to continue, or to cause a wholesale dealer to relinquish a franchise (Sec. 5).

• Authorizes the certificate of approval holder or manufacturer, in the absence of such a provision or in the absence of the franchise established in writing, to cancel, terminate, refuse to continue, or cause the wholesale dealer to relinquish the franchise for good cause or for no cause (Sec. 5).

• Requires a certificate of approval holder or manufacturer that wishes to relinquish the franchise for no cause to (Sec. 5):

• Provide the franchisee with written notice of the intent to cancel or terminate the franchise at least 30 days before the termination date; and

• Pay or have paid compensation for the franchisee’s interest in the franchise on or before the date the franchise will be canceled or terminated. 

• Requires, in the absence of a provision of the franchise to the contrary or in the absence of the franchise established in writing, a wholesale dealer wanting to sell or transfer its interests in a franchise to give at least 90 days’ written notice of the proposed sale or transfer to the certificate of approval holder or manufacturer (Sec. 5).

• Authorizes a certificate of approval holder or manufacturer in opposition to the proposed sale or transfer, to (Sec. 5):

• Prevent the proposed sale or transfer by paying compensation for the wholesale dealer’s interest in the franchise; or

• File a petition  no less than 60 days before the proposed sale or transfer, with the Superior Court that states the reasons of the certificate of approval holder or manufacturer for resisting the proposed sale or transfer.

• Prohibits, in the absence of a provision of the franchise to the contrary or in the absence of the franchise established in writing, the merger of a certificate of approval holder or manufacturer with a third party from voiding the franchise unless good cause is proven (Sec. 5).

• Requires franchise agreements entered into before January 1, 2019 and not established in writing, to transition to a written franchise agreement that must take effect on or before July 1, 2022 (Sec. 12).

Full Bill Text