Distributor franchise

Definition

In some states, a brewery's tie to its distributor, which it cannot end without cause or a statutory price.

Why It Matters

Taproom share warns of a distributor agreement the brewery may not be able to end. In Ohio the reason is a franchise act covering any contract or other legal device between brewer and distributor, and ninety days of distributing without a written contract creates one. Without the distributor's consent, no brewer may cancel or refuse to renew except for just cause and on sixty days' written notice. Handing a brand to an affiliate the brewer controls is not just cause. A successor that acquires all or substantially all of the brewery's stock or assets gets one opening: ninety days to end a distributor's franchise for the acquired brand. It must then buy back that distributor's inventory at laid-in cost and pay the diminished value of its business, goodwill included, before the territory can go to anyone else. Miss the window and the franchise binds the buyer. Washington leaves breweries under two hundred thousand barrels a year outside its act altogether. Map every distributor to its state before pricing any change of channel.