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View Full Version : NY Self distribution, how to protect our distribution rights?



kugeman
11-12-2014, 11:39 AM
We are a brewpub in NY State that sells about 35% of our beer at wholesale. We currently self-distribute in the Hudson Valley and Capital Region of NY to a number of bars, restaurants, and occasionally a beer store or two. We have an opportunity to sell a number of kegs (say 5-6 at a time, once or twice a month) to a beer store in a nearby city that we don't currently service. It could be a good opportunity for us to make some extra money in a new market, attract some business to the brewpub and sell off some extra beer during a slow time of the year.

My concern is that because they are both a store and licensed wholesaler, I'm worried that if we sell them beer they could eventually claim our distribution rights. We can tell them not to resell our beer, but if they do resell a keg they could then claim to have distributed our beer. I've heard of a few incidents of this happening in the past in NY state.

Although I'm asking about NY specifically I can see where this situation could apply to other states that allow small brewers to self distribute.

Has anyone ever run into this situation before, if so how did you protect your distribution rights? Did you use a contract or release letter to insure that no one could claim your distribution rights without your consent?

Thanks in advance for any help.

Cheers!

Thirsty_Monk
11-12-2014, 02:31 PM
Each state had different rules about this. In my state it is govern by franchise law. As long as you do not sign franchise agreement, you are retaining distribution rights.

Good luck.

BeerBred
12-03-2014, 10:20 PM
Each state had different rules about this. In my state it is govern by franchise law. As long as you do not sign franchise agreement, you are retaining distribution rights.

Good luck.
I'm pretty sure this is wrong. There is really no need for a distribution agreement anyway. State law trumps any agreement. Using a wholesaler implies the agreement, the question legally is having used them for how long... I'm not sure. In other words, I'm not sure if selling to a C license once will bind you. I doubt it. And if you're "out of the market" for one year after that only sale, I'm pretty sure it clears the slate. That's one way a brewery can dump a wholesaler, pull out for a year. Another technicality is to only assign them the brand they're buying. We had a distributor at Genesee once we hated so much, when we came out with our craft beers under the highfalls umbrella, we didn't assign it to that house. I would contact Robert Lehrman at beerlaw.com. He's in Raleigh but he's from Syracuse. Or talk to someone at the NYS guild.

Thirsty_Monk
12-04-2014, 05:44 AM
I'm pretty sure this is wrong. There is really no need for a distribution agreement anyway. State law trumps any agreement. Using a wholesaler implies the agreement, the question legally is having used them for how long... I'm not sure. In other words, I'm not sure if selling to a C license once will bind you. I doubt it. And if you're "out of the market" for one year after that only sale, I'm pretty sure it clears the slate. That's one way a brewery can dump a wholesaler, pull out for a year. Another technicality is to only assign them the brand they're buying. We had a distributor at Genesee once we hated so much, when we came out with our craft beers under the highfalls umbrella, we didn't assign it to that house. I would contact Robert Lehrman at beerlaw.com. He's in Raleigh but he's from Syracuse. Or talk to someone at the NYS guild.

Thank you for reading my reply and then telling me I am wrong. Yes please talk to someone in NC about NY rules. Brilliant.

BeerBred
12-04-2014, 07:39 AM
Thank you for reading my reply and then telling me I am wrong. Yes please talk to someone in NC about NY rules. Brilliant.

http://beerlawcenter.com/about-beer-law-center/

While their virtual offices are based in Raleigh, they do work regarding beverage law in other states as many specialty law firms do. R. Lehrman is from Syracuse, not far from our posters town. He likely knows the legal answer without having to do any research. Not having a franchise agreement will not abscond you from a distribution relationship. Once you ship a distributor beer, a relationship is implied. The question here is does a "C" license count under this law as well. And we are dealing with laws here, not rules.