<section article="gab" article_name="Alcoholic Beverages and Cannabis" number="5-101" title_number="5" title_name="General Beer Regulation" subtitle_number="1" subtitle_name="Beer Franchise Fair Dealing Act"> <level label="a"> <text>In this subtitle the following words have the meanings indicated.</text> </level> <level label="b"> <text>“Beer distributor” means a person that imports or causes to be imported into the State, or purchases or causes to be purchased in the State, beer for sale or resale to a retail dealer licensed under this article without regard to whether the business of the person is conducted under a beer franchise agreement or another form of agreement with a beer manufacturer.</text> </level> <level label="c"> <text>“Beer franchise agreement” means:</text> <level label="1"> <text>a commercial relationship between a beer distributor and beer manufacturer that:</text> <level label="i"> <text>is of a definite or indefinite duration; and</text> </level> <level label="ii"> <text>is not required to be in writing;</text> </level> </level> <level label="2"> <text>a relationship in which a beer manufacturer grants a beer distributor the right to offer and sell the brands of beer offered by the beer manufacturer;</text> </level> <level label="3"> <text>a relationship in which a beer distributor, as an independent business, constitutes a component of a beer manufacturer’s distribution system;</text> </level> <level label="4"> <text>a relationship in which a beer distributor’s business is substantially associated with a beer manufacturer’s brand, advertising, or another commercial symbol that designates the beer manufacturer;</text> </level> <level label="5"> <text>a relationship in which a beer distributor’s business relies substantially on a beer manufacturer for the continued supply of beer; or</text> </level> <level label="6"> <text>a written or oral arrangement of definite or indefinite duration in which:</text> <level label="i"> <text>a beer manufacturer grants to a beer distributor the right to use a trade name, trademark, service mark, or related characteristic; and</text> </level> <level label="ii"> <text>there is a community of interest in the marketing of goods or services at wholesale or retail, by lease, or by another method.</text> </level> </level> </level> <level label="d"> <text>“Beer manufacturer” means:</text> <level label="1"> <text>a brewer, fermenter, processor, bottler, or packager of beer located in or outside the State; or</text> </level> <level label="2"> <text>a person located in or outside the State that enters into a beer franchise agreement with a beer distributor doing business in the State.</text> </level> </level> <level label="e"> <text>“Fair market value” means the price at which an asset would change hands between a willing seller and a willing buyer when:</text> <level label="1"> <text>neither is acting under any compulsion; and</text> </level> <level label="2"> <text>both have knowledge of all of the relevant facts.</text> </level> </level> <level label="f"> <text>“Franchisee” means:</text> <level label="1"> <text>a beer distributor to whom a beer franchise agreement is granted or offered; or</text> </level> <level label="2"> <text>a beer distributor that is a party to a beer franchise agreement.</text> </level> </level> <level label="g"> <text>“Franchisor” means a beer manufacturer that:</text> <level label="1"> <text>enters into a beer franchise agreement with a beer distributor; or</text> </level> <level label="2"> <text>is a party to a beer franchise agreement.</text> </level> </level> <level label="h"> <text>“Sales territory” means the area of sales responsibility designated by a beer franchise agreement for the brand or brands of beer of a beer manufacturer.</text> </level> </section> <section article="gab" article_name="Alcoholic Beverages and Cannabis" number="5-102" title_number="5" title_name="General Beer Regulation" subtitle_number="1" subtitle_name="Beer Franchise Fair Dealing Act"> <text>This subtitle applies to corporations, partnerships, trusts, agencies, and other entities and to persons who are officers, directors, and other individuals in active control of the activities of a corporation, a partnership, a trust, an agency, or any other entity.</text> </section> <section article="gab" article_name="Alcoholic Beverages and Cannabis" number="5-103" title_number="5" title_name="General Beer Regulation" subtitle_number="1" subtitle_name="Beer Franchise Fair Dealing Act"> <level label="a"> <text>It is the policy of the State that:</text> <level label="1"> <text>it is necessary to regulate and control beer franchise agreements and relationships between beer manufacturers and beer distributors:</text> <level label="i"> <text>to foster and promote temperance in the consumption of beer; and</text> </level> <level label="ii"> <text>to promote respect for and obedience to the laws that control the distribution and sale of beer; and</text> </level> </level> <level label="2"> <text>temperance and obedience to the laws that control the distribution and ultimate sale of beer is promoted by legislation that encourages beer distributors to make investments in their facilities to serve retail license holders by protecting them against the termination of beer distributorships, or other acts described in this subtitle, without good cause for the termination or other acts.</text> </level> </level> <level label="b"> <text>It is necessary to accomplish this policy to eliminate the undue stimulation of sales of beer in the State by beer manufacturers that induce or coerce, or attempt to induce or coerce, beer distributors to act detrimentally to the orderly and lawful distribution of beer by:</text> <level label="1"> <text>threatened or actual termination of the beer manufacturer and beer distributor relationship, directly or indirectly;</text> </level> <level label="2"> <text>the establishment of dual beer distributors of a brand or brands of beer in a sales territory presently served by a beer distributor; or</text> </level> <level label="3"> <text>the sale of the same brand or brands of beer in one sales territory by more than one franchisee.</text> </level> </level> <level label="c"> <text>The General Assembly further recognizes the distinction between the nature of the distribution of beer and other alcoholic beverages in that distributors of alcoholic beverages other than beer are franchised by manufacturers to distribute many brands of various kinds of alcoholic beverages and are not as vulnerable to the economic pressures of the manufacturers as are beer distributors, which traditionally handle mainly one, two, or three brands of beer in their distributorships.</text> </level> </section> <section article="gab" article_name="Alcoholic Beverages and Cannabis" number="5-104" title_number="5" title_name="General Beer Regulation" subtitle_number="1" subtitle_name="Beer Franchise Fair Dealing Act"> <text>A beer manufacturer may not:</text> <level label="1"> <text>induce or coerce, or attempt to induce or coerce, a beer distributor to accept delivery of an alcoholic beverage, any form of advertisement, or another commodity that the beer distributor did not order;</text> </level> <level label="2"> <text>induce or coerce, or attempt to induce or coerce, a beer distributor to do an illegal act or thing, or to do an act unfair to the beer distributor, by threatening to cancel, terminate, or refuse to renew a beer franchise agreement that exists between the beer manufacturer, or its representative, and the beer distributor; or</text> </level> <level label="3"> <text>fail or refuse to deliver to a beer distributor with a beer franchise agreement any beer that the beer manufacturer or its agents advertised publicly for immediate sale promptly after the beer manufacturer received an order from the beer distributor.</text> </level> </section> <section article="gab" article_name="Alcoholic Beverages and Cannabis" number="5-105" title_number="5" title_name="General Beer Regulation" subtitle_number="1" subtitle_name="Beer Franchise Fair Dealing Act"> <text>If a franchisor designates a sales territory for which a franchisee is primarily responsible or in which a franchisee is required to concentrate its efforts, the franchisor may not enter into a beer franchise agreement with another beer distributor to establish an additional franchisee for its brand or brands of beer in that sales territory.</text> </section> <section article="gab" article_name="Alcoholic Beverages and Cannabis" number="5-106" title_number="5" title_name="General Beer Regulation" subtitle_number="1" subtitle_name="Beer Franchise Fair Dealing Act"> <text>If a franchisee is granted a sales territory for which the franchisee is primarily responsible or in which the franchisee is required to concentrate its efforts, the franchisee may not sell or deliver beer to a retail dealer whose place of business is not within the sales territory granted to the franchisee.</text> </section> <section article="gab" article_name="Alcoholic Beverages and Cannabis" number="5-107" title_number="5" title_name="General Beer Regulation" subtitle_number="1" subtitle_name="Beer Franchise Fair Dealing Act"> <level label="a"> <text>This section does not apply to a temporary delivery agreement under § 2–209(c) of this article for a beer festival or a wine and beer festival.</text> </level> <level label="b"> <level label="1"> <text>Except as provided in subsection (d) of this section, if a franchisor intends to terminate or refuses to renew a beer franchise agreement, the franchisor shall notify the franchisee in writing of its intent:</text> <level label="i"> <text>at least 45 days before the termination or refusal to renew takes effect, for a franchisor that annually produces 20,000 or fewer barrels of beer in aggregate, in conjunction with any affiliate; and</text> </level> <level label="ii"> <text>at least 180 days before the termination or refusal to renew takes effect, for all other franchisors.</text> </level> </level> <level label="2"> <text>The notices required by this section shall state all the reasons for the intended termination or nonrenewal.</text> </level> </level> <level label="c"> <level label="1"> <text>If a deficiency is claimed in the notice provided under subsection (b)(1)(ii) of this section, the franchisee has 180 days to rectify the deficiency.</text> </level> <level label="2"> <text>If the franchisee rectifies the deficiency within 180 days after the notice provided under subsection (b)(1)(ii) of this section is received, the intended termination or nonrenewal of the beer franchise agreement is void.</text> </level> </level> <level label="d"> <text>The notice requirement of subsection (b) of this section does not apply if the reason for the intended termination or nonrenewal is insolvency, the occurrence of an assignment for the benefit of creditors, or bankruptcy.</text> </level> </section> <section article="gab" article_name="Alcoholic Beverages and Cannabis" number="5-108" title_number="5" title_name="General Beer Regulation" subtitle_number="1" subtitle_name="Beer Franchise Fair Dealing Act"> <level label="a"> <text>This section does not apply to a temporary delivery agreement under § 2–209(c) of this article for a beer festival or a wine and beer festival.</text> </level> <level label="b"> <level label="1"> <level label="i"> <text>This paragraph does not apply to a franchisor that annually produces 20,000 or fewer barrels of beer in aggregate, in conjunction with any affiliate.</text> </level> <level label="ii"> <text>Notwithstanding the terms of a beer franchise agreement, a franchisor may not terminate or refuse to continue or renew a beer franchise agreement, or cause a franchisee to resign from a beer franchise agreement, without good cause.</text> </level> </level> <level label="2"> <text>For purposes of paragraph (1) of this subsection, good cause includes the revocation of a franchisee’s license to do business in the State.</text> </level> </level> </section> <section article="gab" article_name="Alcoholic Beverages and Cannabis" number="5-109" title_number="5" title_name="General Beer Regulation" subtitle_number="1" subtitle_name="Beer Franchise Fair Dealing Act"> <level label="a"> <text>This section applies only to a franchisor that annually produces 20,000 or fewer barrels of beer in aggregate, in conjunction with any affiliate.</text> </level> <level label="b"> <level label="1"> <text>Subject to § 5–107 of this subtitle, and except as provided in subsection (d) of this section, before termination of or refusal to renew a beer franchise agreement, a franchisor shall enter into a termination agreement with the terminated franchisee.</text> </level> <level label="2"> <text>The termination agreement shall:</text> <level label="i"> <text>compensate the terminated franchisee for the fair market value of the terminated franchise; and</text> </level> <level label="ii"> <text>provide for the repurchase of all the franchisor’s beer at an amount equal to the laid–in cost of the franchisee’s inventory of the franchisor’s products that are in the warehouse or in transit to the franchisee.</text> </level> </level> </level> <level label="c"> <level label="1"> <text>If an agreement on the compensation authorized under subsection (b)(2)(i) of this section is not reached within 45 days after the franchisor provides the notice required by § 5–107(b)(1)(i) of this subtitle, the matter shall be submitted to binding arbitration for the purpose of determining the compensation.</text> </level> <level label="2"> <text>The binding arbitration shall:</text> <level label="i"> <text>be administered under the rules of the commercial arbitration rules of the American Arbitration Association;</text> </level> <level label="ii"> <text>take place in the State;</text> </level> <level label="iii"> <text>be heard by one arbitrator who shall be appointed in accordance with the commercial arbitration rules; and</text> </level> <level label="iv"> <text>be limited to 45 days, unless otherwise agreed to by the parties.</text> </level> </level> <level label="3"> <text>During the period of arbitration, the beer franchise agreement shall remain in effect and may terminate only on the decision of the arbitrator.</text> </level> <level label="4"> <text>The arbitrator shall be governed by the laws of the State, the Maryland Rules, and the commercial arbitration rules.</text> </level> <level label="5"> <text>In determining the fair market value of the terminated franchise, the arbitrator:</text> <level label="i"> <text>may consider only the period before the franchisor provided the notice required by § 5–107(b)(1)(i) of this subtitle; and</text> </level> <level label="ii"> <text>may not consider any period following the providing of that notice.</text> </level> </level> <level label="6"> <text>The ruling of the arbitrator shall be final and subject to enforcement in the courts of the State.</text> </level> <level label="7"> <text>The cost of the arbitration shall be shared equally by the parties.</text> </level> </level> <level label="d"> <text>By written mutual agreement, the franchisor and the franchisee may determine another method of terminating the franchise agreement and providing compensation to the terminated franchisee.</text> </level> <level label="e"> <text>Until resolution regarding fair market value is reached under subsection (b) or (c) of this section and the terminated franchisee has received payment in accordance with the determination of fair market value:</text> <level label="1"> <text>the franchisor and the terminated franchisee shall support the franchisor’s products to at least the same extent that the products had been previously supported immediately before the franchisor provided the notice required by § 5–107(b)(1)(i) of this subtitle; and</text> </level> <level label="2"> <text>the terminated franchisee shall continue to distribute the products.</text> </level> </level> </section> <section article="gab" article_name="Alcoholic Beverages and Cannabis" number="5-110" title_number="5" title_name="General Beer Regulation" subtitle_number="1" subtitle_name="Beer Franchise Fair Dealing Act"> <level label="a"> <level label="1"> <text>A beer distributor or franchisee may bring an action in a court of general jurisdiction to recover damages against a beer manufacturer, franchisor, or franchisee for violation of this subtitle.</text> </level> <level label="2"> <text>If appropriate, the beer distributor or franchisee is entitled to injunctive relief.</text> </level> </level> <level label="b"> <text>In an action for violation of this subtitle, the prevailing beer distributor or franchisee is entitled to the costs of the action including reasonable attorney’s fees.</text> </level> </section> <section article="gab" article_name="Alcoholic Beverages and Cannabis" number="5-201" title_number="5" title_name="General Beer Regulation" subtitle_number="2" subtitle_name="Successor Manufacturers"> <level label="a"> <level label="1"> <text>In this section the following words have the meanings indicated.</text> </level> <level label="2"> <text>“Agreement” means oral or written evidence between a beer manufacturer and a beer wholesaler granting the beer wholesaler the right to offer and sell the brands of beer offered by the beer manufacturer.</text> </level> <level label="3"> <text>“Beer manufacturer” means:</text> <level label="i"> <text>a brewer, fermenter, processor, bottler, or packager of beer located in or outside the State; or</text> </level> <level label="ii"> <text>a person located in or outside the State that enters into an agreement with a beer wholesaler doing business in the State.</text> </level> </level> <level label="4"> <text>“Fair market value” means the price at which an asset would change hands between a willing seller and a willing buyer when neither is acting under any compulsion and when both have knowledge of all of the relevant facts.</text> </level> <level label="5"> <text>“Successor beer manufacturer” includes a person or license holder who replaces a beer manufacturer with the right to sell, distribute, or import a brand of beer.</text> </level> </level> <level label="b"> <text>Except for the discontinuance of a brand of beer or for good cause shown as provided under § 5–108 of this title, a successor beer manufacturer that continues in the business is obligated under all the terms and conditions of the agreement made between the previous beer manufacturer and the existing beer wholesaler that were in effect on the date of change of beer manufacturers.</text> </level> <level label="c"> <text>A successor beer manufacturer that terminates any agreement provision required to be continued under subsection (b) of this section shall remunerate the beer wholesaler a sum equal to the fair market value for the sale of the subject brand or brands of beer calculated from the date of termination.</text> </level> <level label="d"> <level label="1"> <text>Before a successor beer manufacturer may terminate any agreement provision required to be continued under subsection (b) of this section and designate another beer wholesaler to replace the existing beer wholesaler, the successor beer manufacturer shall give notice of termination to the beer wholesaler to be replaced.</text> </level> <level label="2"> <text>On receipt of the notice, the beer wholesaler to be replaced and the designated beer wholesaler shall negotiate in good faith to determine the fair market value of the affected distribution rights.</text> </level> <level label="3"> <text>If an agreement is reached, the designated beer wholesaler promptly shall pay the fair market value as compensation to the beer wholesaler to be replaced.</text> </level> <level label="4"> <text>If an agreement is not reached within 30 days after the beer wholesaler to be replaced receives notice, the designated beer wholesaler and the beer wholesaler to be replaced shall enter into nonbinding mediation with a mediator in the State who practices in accordance with Title 17 of the Maryland Rules.</text> </level> <level label="5"> <text>If an agreement is not reached within 45 days after mediation begins, the beer wholesaler to be replaced shall within 90 days bring an action in a court of general jurisdiction against a successor beer manufacturer to determine and award fair market value of the terminated brand or brands.</text> </level> </level> <level label="e"> <text>Until resolution regarding fair market value is reached under subsection (d) of this section and the beer wholesaler to be replaced has received payment in accordance with the determination of fair market value:</text> <level label="1"> <text>the beer wholesaler to be replaced and the successor beer manufacturer shall support the brand to at least the same extent that the brand had been previously supported immediately before the successor beer manufacturer acquired rights to the brand; and</text> </level> <level label="2"> <text>the beer wholesaler to be replaced shall continue to distribute the brand.</text> </level> </level> </section> <section article="gab" article_name="Alcoholic Beverages and Cannabis" number="5-301" title_number="5" title_name="General Beer Regulation" subtitle_number="3" subtitle_name="Other Beer Regulation"> <level label="a"> <text>A person who supplies or sells beer to a wholesaler for resale to retail dealers shall provide to the wholesaler written information stating the approximate percentage of alcohol content by volume per sealed package or sealed container for each brand of beer supplied or sold to the wholesaler.</text> </level> <level label="b"> <text>A beer wholesaler shall provide to each beer retail dealer with whom it does business the written information it receives under subsection (a) of this section regarding the beer supplied to the retail dealer.</text> </level> <level label="c"> <text>The penalty provisions of § 6–402 of this article do not apply to a violation of this section.</text> </level> </section> <section article="gab" article_name="Alcoholic Beverages and Cannabis" number="5-302" title_number="5" title_name="General Beer Regulation" subtitle_number="3" subtitle_name="Other Beer Regulation"> <text>A person may not be prohibited from selling or delivering to wholesalers or retail dealers within the State beer in the following container sizes:</text> <level label="1"> <level label="6"> <text>33, 7, 8, 10, 11, 11.39, 11.5, 12, 16, 24, 25, 32, or 40 ounces;</text> </level> </level> <level label="2"> <text>740 milliliters;</text> </level> <level label="3"> <text>1, 2.25, 3.875, 5.167, 7.75, 13.209, 13.5, 15, or 15.5 gallons; and</text> </level> <level label="4"> <text>5, 50, or 51 liters.</text> </level> </section> <section article="gab" article_name="Alcoholic Beverages and Cannabis" number="5-303" title_number="5" title_name="General Beer Regulation" subtitle_number="3" subtitle_name="Other Beer Regulation"> <level label="a"> <level label="1"> <text>In this section the following words have the meanings indicated.</text> </level> <level label="2"> <text>“Keg” means a container of beer with a capacity of at least 4 gallons, which is designed to dispense beer directly from the container.</text> </level> <level label="3"> <text>“Keg license holder” means a person who holds a license that authorizes the person to sell beer in kegs at retail.</text> </level> </level> <level label="b"> <text>A keg license holder may not sell or otherwise transfer, or offer to sell or otherwise transfer, the contents of a keg for off–premises consumption unless:</text> <level label="1"> <text>the keg license holder provides to the purchaser a keg registration form approved and distributed by the Executive Director that is designed to be affixed to the keg and that indicates the name and address of the licensed establishment and a registration number;</text> </level> <level label="2"> <text>except as provided in § 26–103 of this article, the purchaser provides identification and completes and signs a registration form with the following information:</text> <level label="i"> <text>the purchaser’s name and address as shown on the identification produced; and</text> </level> <level label="ii"> <text>the date of purchase; and</text> </level> </level> <level label="3"> <text>the keg license holder affixes the completed registration form to the keg and retains a copy of the form for 30 days on the licensed premises.</text> </level> </level> <level label="c"> <level label="1"> <text>On return of a registered keg from the purchaser, the keg license holder shall remove or obliterate the keg registration form affixed to the keg and note the removal and the date of the removal on the copy of the keg registration form retained by the keg license holder at the licensed premises.</text> </level> <level label="2"> <level label="i"> <text>If a keg is made of disposable packaging that does not have to be returned to the keg license holder, the keg license holder shall indicate on the keg registration form that the keg is disposable.</text> </level> <level label="ii"> <text>Disposal of empty kegs made of disposable packaging does not constitute obliteration of the keg registration form.</text> </level> </level> </level> <level label="d"> <text>Each local licensing board shall adopt regulations to carry out this section.</text> </level> <level label="e"> <text>A keg license holder may charge a keg registration fee to a purchaser.</text> </level> <level label="f"> <level label="1"> <text>A keg license holder who violates this section is subject to a fine not exceeding $100 or a suspension or revocation of the license, or both a fine and suspension or revocation.</text> </level> <level label="2"> <text>The existence of a completed registration form signed by the purchaser creates a presumption that the keg license holder has complied with the requirements of this section.</text> </level> </level> </section>