A ten-year effort by craft brewers in Massachusetts to reform the state’s strict franchise laws appears close to ending successfully. A deal between craft brewers and state beer wholesalers is expected to pass a Senate floor vote this week before moving on to the governor for final passage.
State franchise laws, which exist in most states, place strict conditions on a brewer in order to terminate a wholesaler. Even if a brewer meets the criteria to terminate, those conditions can be challenged in court by the wholesaler, and few craft brewers have the ability to fight a protracted legal challenge, essentially giving the wholesaler lifetime ownership of the brand. The MA compromise will allow any brewer with less than 250,000 barrels of annual production to terminate a wholesaler with 30-day notice as long at the wholesaler is compensated fair market value for the brand.
Those states that do have “carve-outs” to exempt small brewers from franchise laws are generally in the 60,000 barrel range, meaning that the MA compromise sets a new precedent for franchise reform.
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