AN ACT TO PRESERVE THE THREE-TIER DISTRIBUTION SYSTEM FOR MALT BEVERAGES IN NORTH CAROLINA BY CLARIFYING PROVISIONS OF THE BEER FRANCHISE LAW TO PROVIDE: A FRANCHISE AGREEMENT APPLIES TO ALL SUPPLIER PRODUCTS UNDER THE SAME BRAND NAME; A WHOLESALER MUST SELL MALT BEVERAGES TO ALL RETAILERS IN ITS TERRITORY AT THE SAME PRICE AT THE TIME OF DELIVERY; PROHIBITED ACTS OF SUPPLIERS WITH RESPECT TO THEIR DEALINGS WITH WHOLESALERS; GOOD CAUSE FOR TERMINATION MAY NOT BE MODIFIED BY AN AGREEMENT THAT DEFINES GOOD CAUSE IN A MANNER DIFFERENT THAN PROVIDED BY STATE LAW; REVERSION OF SMALL BREWERIES' SELF-DISTRIBUTION RIGHTS UNDER CERTAIN CIRCUMSTANCES; CERTAIN ACTS THAT DO NOT AMOUNT TO GOOD CAUSE FOR TERMINATION OF A FRANCHISE; REMEDIES FOR A SUPPLIER'S WRONGFUL TERMINATION OF A FRANCHISE; INCLUSION OF A WHOLESALER MERGER, THE FACTORS THAT MAY BE CONSIDERED BY THE SUPPLIER IN APPROVING A MERGER OR TRANSFER, AND REMEDIES FOR UNLAWFUL REFUSAL TO APPROVE A MERGER OR TRANSFER; THE BEER FRANCHISE LAW MAY NOT BE WAIVED BY AN AGREEMENT CONTRARY TO STATE LAW; AND MEDIATION OF DISPUTES ARISING UNDER THE BEER FRANCHISE LAW; AND TO ALLOW THE ABC COMMISSION TO GRANT A WAIVER ALLOWING THE GENERAL MANAGER OF A LOCAL BOARD TO ALSO BE THE FINANCE OFFICER. Summarized in Daily Bulletin 4/20/11, 6/3/11, 6/7/11, and 5/23/12. Enacted June 4, 2012. The provisions of GS 18B-1304, as amended by this act, are effective October 1, 2012. The remainder is effective June 4, 2012.
Bill Summaries: S745 (2011-2012 Session)
-
Summary date: Jun 4 2012 - View summary
-
Bill S 745 (2011-2012)Summary date: May 23 2012 - View summary
House committee substitute makes the following changes to 3rd edition:
Section 1: (1) deletes previous amendments to GS 18B-1303(b); (2) clarifies amendments to GS 18B-1304(10) that the definition of “discriminate” for purposes of that subsection excludes granting more favorable freight and transportation costs and price promotions for special events under limited circumstances; (3) revises amendments to GS 18B-1305(a1) to provide that a brewery’s authorization to a wholesaler for distribution of its own malt beverage products reverts back to the brewery following the fifth business day after confirmed receipt of written notice of such reversion, and deletes requirement that reversion cannot take effect until brewery and wholesaler agree in writing on the fair market value of distribution rights; (4) deletes previous amendments to GS 18B-1306(b) concerning monetary damages for wrongfull termination; (5) revises amendments to GS 18B-1307 to combine language in previous new subsection (b1) into existing subsection (b) and to add provision in that subsection preserving supplier’s right to match and reassign to a designee the right to purchase an ownership interest subject to the limitation that that the price and conditions applicable to the purchase be the same as those proposed by the transferee; and (6) deletes previous amendments to GS 18B-1307(c) except to make technical and conforming changes to include reference to mergers.
Section 2: Adds new amendments to GS 18B-702(j) clarifying that the Alcoholic Beverage Control Commission may approve a local board general manager also serving as that local board’s finance officer by a grant of a waiver and that the Commission may grant more than one waiver to a local board.
Section 4: Revises the effective date to provide that amendments to GS 18B-1304 become effective October 1, 2012.
Makes other technical and conforming changes and renumbers Sections 3 and 4.
-
Bill S 745 (2011-2012)Summary date: Jun 7 2011 - View summary
Senate amendments make the following changes to 2nd edition. Amendment #1 amends proposed GS 18B-1304(10) to clarify that a supplier may not discriminate, as specified, against one North Carolina wholesaler over another North Carolina wholesaler based on the quantity of malt beverages purchased or for any other reason; discriminate does not include freight and transportation costs, price promotions on malt beverage products in a particular market not to exceed 14 consecutive days, point-of-sale advertising materials, sponsorships, consumer specialty items, consumer sweepstakes, and novelties. Allows a supplier to match competitor prices in the entire state or particular market. Makes a clarifying change.
Amendment #2 amends proposed GS 18B-1305B(d)(5) to clarify that when a supplier has implemented standards on a national basis and those standards are consistently applied to all similarly situated North Carolina wholesalers in a nondiscriminatory manner, failure of a wholesaler to meet such standards may show cause to terminate.
Amendment #3 clarifies that the act is effective when it becomes law, and applies to all transactions on or after that date.
-
Bill S 745 (2011-2012)Summary date: Jun 3 2011 - View summary
Senate committee substitute makes the following changes to 1st edition. Adds new subsection (a1) to GS 18B-1305 providing for the termination of a franchise agreement by a small brewery. Makes a conforming change to GS 18B-1304.
Amends GS 18B-1304 to create an exception to the provision that makes it unlawful for a supplier, an officer, agent, or representative of a supplier to prohibit a wholesaler from distributing the product of any other supplier. Makes it unlawful for a supplier, an officer, agent, or representative of a supplier to withdraw money from or otherwise access a wholesaler’s bank accounts without the wholesaler’s consent (was, also made it unlawful to require a wholesaler to participate in an arrangement for the payment or crediting by an electronic fund transfer without the wholesaler’s consent).
Amends GS 18B-1307 providing that in determining whether the proposed transferee or merged wholesaler is a qualified person, the supplier must consider (was, may consider), but is not limited to, the specified factors. Makes technical changes. Makes a conforming change to the bill title.
-
Bill S 745 (2011-2012)Summary date: Apr 20 2011 - View summary
Identical to H 764, filed 4/6/11.
Amends GS 18B-1303 through 18B-1308 and enacts new GS 18B-1309 to provide as the title indicates. Clarifies that a franchise agreement applies to all supplier products under the same brand name and that different categories of products manufactured under a common identifying trade name are considered to be the same brand. Expands the list of acts for which it is unlawful for a supplier or the supplier's representative to engage in with respect to the supplier's dealings with a wholesaler. Adds that good cause for the termination, alteration, or failure to renew a franchise agreement does not include (1) the sale or transfer of the rights to manufacture, distribute, or use the trade name of the brand to a successor supplier, whether the sale or transfer is made directly from the original supplier to the successor or goes through a third party; (2) failure of the wholesaler to meet operation or performance standards unilaterally imposed or revised by the supplier without a fair opportunity for the wholesaler to bargain as to the terms; (3) the wholesaler's establishment of a franchise agreement with another supplier, or the acquisition by the wholesaler of the right to distribute the brand of another supplier; and (4) the desire of a supplier to consolidate its franchises.
Provides that a wholesaler whose franchise agreement is terminated, altered, or not renewed in violation of Article 13 (Beer Franchise Law) of GS Chapter 18B is entitled to recover monetary damages from the supplier in addition to (was, in lieu of) injunctive relief. Provides criteria governing the amount of the monetary damages due the wholesaler. Provides criteria for the transfer or merger of a wholesaler's business; includes permitting a wholesaler to merge with another wholesaler in the state and transfer the merging wholesaler's existing franchise rights to the new wholesaler entity. Makes conforming changes regarding the merger of a wholesaler's business. Provides factors that the supplier may consider in determining whether the proposed transferee or merged wholesaler is a qualified person. Provides that the burden is on the supplier to prove that the proposed transferee or merged wholesaler is not qualified. Provides that a wholesaler may seek injunctive relief to enforce the provisions of this section. Also provides that supplier is liable for any monetary damages suffered by the wholesaler because the supplier unlawfully refused to approve a sale, transfer, or merger resulting in blocking the wholesaler's ability to complete a sale, transfer, or merger.
Provides criteria for mediation of a dispute between a wholesaler and a supplier under the direction the Alcoholic Beverage Control Commission.
States that the provisions of this act are severable, providing that if any of the proposed provisions or their applications is held to be invalid, the invalidity does not affect other provisions or applications that can be given effect without the invalid provisions or applications.
Effective when the act becomes law and its provisions apply to all existing franchise agreements. Provides that a supplier's shipment of malt beverages to a wholesaler in North Carolina following the effective date of this act constitutes acceptance by the supplier of the terms of this act, and the acceptance is to be considered as incorporated into the agreement between the supplier and the wholesaler.