PDA

View Full Version : Contracts with Distributors



ac77
10-25-2012, 12:52 PM
Hey everyone! I was wondering if anyone has a sample contract that they could post a link to that I could use as a template for my brewing business? I have no idea what one should even look like. We are looking to distribute cases (24 - 12 oz glass bottles per case).

Also, would appreciate the input from the community on the following:

What are the 5 biggest things (as in not obvious) we should look out for when trying to partner with a distributor?

What would be the average deal length and percentage for a distribution agreement with a small new craft brewery.



Thanks everyone!!

yap
10-25-2012, 01:02 PM
Generally, they have a standard contract they will give you and you can then have a lawyer look it over and go back and forth from there.

A lot (if not most states?) are franchise law which means the term on the deal is perpetual, not a 2 or 3 year deal. You are stuck with them until the agreement is "mutually severed".

ac77
11-13-2012, 03:54 PM
Thanks for the reply Scott! Do you happen to have a sample contract you can send me way. I can PM if that is possible.

THANKS!

Buckley
09-30-2013, 08:36 AM
Looking for a starting point for a simple distribution contract. Anyone?

beerlawcenter
10-22-2013, 08:17 AM
There aren't a lot of "simple" distribution contracts.

As someone mentioned earlier, each state has it's own Franchise Laws which govern business opportunities in that state (including the distribution of alcoholic beverages - btw, beer and/or wine is sometimes dealt with separately from "intoxicating liquors"). Each state is very particular about what's required, the terms, the dissolution requirements, etc.

Also, as stated earlier, what you would expect is that each distributor has their "standard" contract (and they'll look broadly similar from distributor to distributor within the state). Ask for a copy of their standard contract and then take it to a lawyer licensed to practice in your state (preferably with some alcohol distribution experience) for review. Even their "standard" contracts (which many distributors will claim is just the minimum requirements of the franchise law) tend to be skewed in the favor of the distributor (above and beyond the legal requirements). Before you see your lawyer, read over the Alcohol Franchise Laws for your state (it will probably scare you a bit).

So, the better question, it seems, to ask is "does anyone have a distribution contract in [what's your state again?] that they wouldn't mind sharing (even if you redact/black-out the sensitive parts)?

yap
10-22-2013, 08:37 AM
Most of the ones I have seen (at least the ones that originate on the distributor side) are insanely simple. 1-2 pages at most. Why? Because in a franchise state, it doesn't matter what that piece of paper says, the law trumps it. You can put any clauses/stipulations sales targets you want in there. At the end of the day they don't mean crap because the distributor always has the law on their side to back them up. I even know guys that thought they could "get around" the whole thing by not even signing an agreement. As soon as the first shipment hits their warehouse, the law kicks in and you are stuck, regardless if your contract is 1 page or 100.....

Again, this is only in reference to a strict franchise state. Each state can (and will be) different....

GlacierBrewing
10-22-2013, 01:13 PM
Check with your state regarding how difficult it may be to get out of a contract with a distributor. Some states require written notice sent to the distributor detailing the issues, then multiple months are given to "cure" any issues (during which time your beers may or may not be actively pushed by your distributor), then if no cure is reached, the contract can be nullified and you get to pick-up the remains of what was your market penetration.
Do your homework, hire a lawyer.

Prost!
Dave