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Fair market value payout upon termination

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  • Fair market value payout upon termination

    I am looking for comments regarding the following topics in contracts between the brewery and a distributor:

    1. Termination:
    a. time frames (90, 60, 30 day notices by either party)
    b. buy-outs when termination is initiated by the brewery. I have am reviewing a contract right now that states 2 times the previous years gross profits this is how they want to calculate "fair market value".

    Let me know what you have in your contracts regarding these two topics. I am very interested to see what is going on around the country.

    Thank you very much in advance!
    Shawn
    North Star Craft Brewery

  • #2
    It will vary from state to state. Some states, like TN, the government regulates the brewer-distributor relationship, right down to how many days notice before termination, etc.
    Linus Hall
    Yazoo Brewing
    Nashville, TN
    www.yazoobrew.com

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    • #3
      Linus is correct - many states mandate minimum provisions in brewer-distributor contracts in regards to termination; just cause; wholesaler deficiencies, remedies etc. Around these parts the buy out provisions seem to be in the range of $4 to $7 per annual case equivalent sold.

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      • #4
        In NY its nearly impossible if the distributor doesn't want to let you go.

        Varies state to state

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