# Alcoholic Beverages and Cannabis (GAB)

## Title 5. General Beer Regulation

### Subtitle 1. Beer Franchise Fair Dealing Act

#### Section 5-101

(a) In this subtitle the following words have the meanings indicated.

(b) "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.

(c) "Beer franchise agreement" means:

  (1) a commercial relationship between a beer distributor and beer manufacturer that:

    (i) is of a definite or indefinite duration; and

    (ii) is not required to be in writing;

  (2) 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;

  (3) a relationship in which a beer distributor, as an independent business, constitutes a component of a beer manufacturer's distribution system;

  (4) 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;

  (5) a relationship in which a beer distributor's business relies substantially on a beer manufacturer for the continued supply of beer; or

  (6) a written or oral arrangement of definite or indefinite duration in which:

    (i) a beer manufacturer grants to a beer distributor the right to use a trade name, trademark, service mark, or related characteristic; and

    (ii) there is a community of interest in the marketing of goods or services at wholesale or retail, by lease, or by another method.

(d) "Beer manufacturer" means:

  (1) a brewer, fermenter, processor, bottler, or packager of beer located in or outside the State; or

  (2) a person located in or outside the State that enters into a beer franchise agreement with a beer distributor doing business in the State.

(e) "Fair market value" means the price at which an asset would change hands between a willing seller and a willing buyer when:

  (1) neither is acting under any compulsion; and

  (2) both have knowledge of all of the relevant facts.

(f) "Franchisee" means:

  (1) a beer distributor to whom a beer franchise agreement is granted or offered; or

  (2) a beer distributor that is a party to a beer franchise agreement.

(g) "Franchisor" means a beer manufacturer that:

  (1) enters into a beer franchise agreement with a beer distributor; or

  (2) is a party to a beer franchise agreement.

(h) "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.

#### Section 5-102

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.

#### Section 5-103

(a) It is the policy of the State that:

  (1) it is necessary to regulate and control beer franchise agreements and relationships between beer manufacturers and beer distributors:

    (i) to foster and promote temperance in the consumption of beer; and

    (ii) to promote respect for and obedience to the laws that control the distribution and sale of beer; and

  (2) 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.

(b) 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:

  (1) threatened or actual termination of the beer manufacturer and beer distributor relationship, directly or indirectly;

  (2) the establishment of dual beer distributors of a brand or brands of beer in a sales territory presently served by a beer distributor; or

  (3) the sale of the same brand or brands of beer in one sales territory by more than one franchisee.

(c) 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.

#### Section 5-104

A beer manufacturer may not:

(1) 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;

(2) 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

(3) 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.

#### Section 5-105

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.

#### Section 5-106

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.

#### Section 5-107

(a) This section does not apply to a temporary delivery agreement under Sec. 2-209(c) of this article for a beer festival or a wine and beer festival.

(b)

  (1) 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:

    (i) 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

    (ii) at least 180 days before the termination or refusal to renew takes effect, for all other franchisors.

  (2) The notices required by this section shall state all the reasons for the intended termination or nonrenewal.

(c)

  (1) 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.

  (2) 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.

(d) 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.

#### Section 5-108

(a) This section does not apply to a temporary delivery agreement under Sec. 2-209(c) of this article for a beer festival or a wine and beer festival.

(b)

  (1)

    (i) 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.

    (ii) 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.

  (2) For purposes of paragraph (1) of this subsection, good cause includes the revocation of a franchisee's license to do business in the State.

#### Section 5-109

(a) This section applies only to a franchisor that annually produces 20,000 or fewer barrels of beer in aggregate, in conjunction with any affiliate.

(b)

  (1) Subject to Sec. 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.

  (2) The termination agreement shall:

    (i) compensate the terminated franchisee for the fair market value of the terminated franchise; and

    (ii) 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.

(c)

  (1) 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 Sec. 5-107(b)(1)(i) of this subtitle, the matter shall be submitted to binding arbitration for the purpose of determining the compensation.

  (2) The binding arbitration shall:

    (i) be administered under the rules of the commercial arbitration rules of the American Arbitration Association;

    (ii) take place in the State;

    (iii) be heard by one arbitrator who shall be appointed in accordance with the commercial arbitration rules; and

    (iv) be limited to 45 days, unless otherwise agreed to by the parties.

  (3) During the period of arbitration, the beer franchise agreement shall remain in effect and may terminate only on the decision of the arbitrator.

  (4) The arbitrator shall be governed by the laws of the State, the Maryland Rules, and the commercial arbitration rules.

  (5) In determining the fair market value of the terminated franchise, the arbitrator:

    (i) may consider only the period before the franchisor provided the notice required by Sec. 5-107(b)(1)(i) of this subtitle; and

    (ii) may not consider any period following the providing of that notice.

  (6) The ruling of the arbitrator shall be final and subject to enforcement in the courts of the State.

  (7) The cost of the arbitration shall be shared equally by the parties.

(d) 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.

(e) 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:

  (1) 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 Sec. 5-107(b)(1)(i) of this subtitle; and

  (2) the terminated franchisee shall continue to distribute the products.

#### Section 5-110

(a)

  (1) 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.

  (2) If appropriate, the beer distributor or franchisee is entitled to injunctive relief.

(b) 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.

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Md. Code Ann., Alco. Bev. (as displayed at mgaleg.maryland.gov, October 16, 2026)