# Commercial Law (GCL)

## Title 11. Trade Regulation

### Subtitle 13. Maryland Fair Distributorship Act

#### Section 11-1301

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

(b) "Agreement" means a contract or other agreement between a grantor and a distributor.

(c)

  (1) "Cancel" means to terminate an agreement prior to the natural expiration date of its term.

  (2) "Cancel" includes a de facto cancellation.

(d) "Commercial goods" means, as those terms are defined in the wholesale trade section of the 1987 edition of the federal Office of Management and Budget's Standard Industrial Classification Manual, durable goods, except for:

  (1) Motor vehicles and motor vehicle parts and supplies;

  (2) Furniture;

  (3) Office equipment, computers, computer peripheral equipment, and software; and

  (4) Prerecorded tapes, cassettes, film, and videos and books or other similar items for which copyright protection might be available.

(e) "De facto cancellation" means actions taken by the grantor that:

  (1) Materially alter the competitive business and economic conditions of a distributor;

  (2) Are not applicable to similarly situated distributors of that grantor's products; and

  (3) Are intended to be discriminatory and detrimental to the distributor.

(f) "Deficiency" means the failure of a distributor to comply substantially with the fair, reasonable, and material requirements imposed or sought to be imposed on the distributor by the grantor.

(g)

  (1) "Distributor" means a person:

    (i) Whose primary business is the wholesale distribution of commercial goods for resale;

    (ii) Who maintains an inventory of commercial goods for resale;

    (iii) Who has been granted either expressly or implicitly the right to sell or distribute a grantor's commercial goods in Maryland for resale to retailers or other resellers or to an industrial or commercial manufacturer; and

    (iv) Who conducts a substantial business in Maryland.

  (2) "Distributor" does not include:

    (i) A sales representative that does not maintain an inventory of commercial goods; or

    (ii) A direct seller whose work is exempt from covered employment under Sec. 8-206(b) of the Labor and Employment Article.

(h) "Grantor" means a person, including a manufacturer, that grants distribution and sales rights to a distributor.

#### Section 11-1302

(a) This subtitle applies to any agreement under which a grantor's commercial goods are distributed or sold in this State.

(b) Notwithstanding any other provision of this subtitle, this subtitle does not apply to:

  (1) A seller of business opportunities regulated under the Maryland Business Opportunity Sales Act, Title 14, Subtitle 1 of the Business Regulation Article;

  (2) A franchisor regulated under the Maryland Franchise Registration and Disclosure Law, Title 14, Subtitle 2 of the Business Regulation Article;

  (3) A supplier regulated under the Equipment Dealer Contract Act, Title 19 of this article;

  (4) A manufacturer, producer, or refiner of petroleum products that are motor fuels regulated under Title 10 of the Business Regulation Article;

  (5) A franchisor regulated under the Beer Franchise Fair Dealing Act; or

  (6) A manufacturer, producer, or supplier of wine or distilled spirits.

#### Section 11-1302.1

In addition to any other provision of this subtitle, when notifying a distributor of a proposed cancellation or nonrenewal of any agreement, a grantor shall provide a notice of the distributor's failure to comply with a reasonable requirement of the agreement and an opportunity to cure or dispute the asserted deficiency.

#### Section 11-1303

(a) Except as provided in subsections (d) and (e) of this section, a grantor shall notify a distributor not less than 60 days before:

  (1) The proposed date of cancellation of an agreement that has not expired according to its terms; or

  (2) For agreements that contemplate renewal options exercisable by either party, the expiration date of an agreement that the grantor does not intend to renew.

(b) The notice required under subsection (a) of this section shall:

  (1) Be in writing and be sent by certified mail, return receipt requested; and

  (2) Contain:

    (i) A statement that the grantor intends to cancel or not renew the agreement;

    (ii) A list of reasons for the proposed cancellation or nonrenewal, including any deficiencies on the part of the distributor;

    (iii) A statement of the effective date of the proposed cancellation or nonrenewal; and

    (iv) If deficiencies are identified by the grantor under subparagraph (ii) of this paragraph, a statement that the distributor may attempt to cure deficiencies that are identified as a basis for the cancellation or nonrenewal, as provided in Sec. 11-1305 of this subtitle.

(c) Unless the parties agree to the contrary, neither a distributor nor a grantor may alter payment, credit, or delivery terms affecting the distributor during the period between the notice required under subsection (a) of this section and the proposed date of cancellation or nonrenewal, or during the period of cure described in Sec. 11-1305 of this subtitle.

(d) A grantor is not required to comply with the provisions of this section if the reason for the cancellation or nonrenewal includes any of the following:

  (1) For any items that are not in dispute, the failure of the distributor to pay the grantor for commercial goods received;

  (2) The actual or pending insolvency, the occurrence of an assignment for the benefit of creditors, or the bankruptcy of the distributor or of its parent entity or of any affiliated entity that has financial control over it;

  (3) A danger to the public health or safety caused by the distributor or any affiliated entity over which it has control;

  (4) Abandonment of the agreement by the distributor or any other matter which a court finds to be justification for a premature cancellation or nonrenewal;

  (5) Conduct by the distributor expressly prohibited under a written agreement that materially affects the relationship between the distributor and grantor;

  (6) Conduct by the distributor that materially alters the commercial viability of the grantor's commercial goods in the marketplace; or

  (7) Affirmative bad faith, dishonest, fraudulent, or illegal acts by the distributor.

(e) Notwithstanding any other provision of this section, the notice and cure provisions of this subtitle do not apply to a termination of a distributorship at the natural expiration of the specified term of a written contract that does not contemplate renewal options exercisable by either party.

#### Section 11-1304

(a) Except as provided in subsection (c) of this section, on cancellation or nonrenewal of an agreement by a grantor for any reason, including a distributor's failure to cure under Sec. 11-1305 of this subtitle, the grantor shall have the right to, and must at the option of the distributor, repurchase all merchandise sold by the grantor to the distributor, and the distributor must sell the merchandise to the grantor, at a price equal to:

  (1) An amount agreed on by the parties; or

  (2)

    (i) With respect to merchandise that is still in its original condition, is part of the grantor's current product line, and was shipped within 6 months of the cancellation or nonrenewal, the purchase price paid by the distributor;

    (ii) With respect to all other merchandise, including samples, display models, and damaged merchandise, the wholesale fair market value of the merchandise less depreciation, or the purchase price paid by the distributor, whichever is less; and

    (iii) With respect to special tools, accessories, display equipment, and other similar items, the purchase price paid by the distributor, less depreciation, or an amount agreed upon by the parties.

(b) The repurchase requirements under subsection (a) of this section shall be completed within 30 days after the effective date of cancellation or nonrenewal, unless the parties agree otherwise.

(c) The distributor's option to repurchase under subsection (a) of this section does not apply if the reason for cancellation or nonrenewal includes any of the reasons listed in Sec. 11-1303(d) of this subtitle.

(d) Repurchase of inventory under this section is not subject to the bulk transfers provisions of Title 6 of this article.

#### Section 11-1305

(a) If the grantor identified deficiencies on the part of the distributor in the notice under Sec. 11-1303(b)(2)(ii) of this subtitle and if a distributor opposes the cancellation or nonrenewal of an agreement, the distributor shall be permitted to attempt to resolve its differences with the grantor by:

  (1) Within 30 days after the receipt of the notice of cancellation or nonrenewal, filing with the grantor a notice of intention to oppose the cancellation or nonrenewal; and

  (2) Implementing a plan, as approved by the grantor, for the correction of the deficiencies described by the grantor as constituting the reasons for the cancellation or nonrenewal.

(b) The grantor and distributor must make good faith efforts to mutually adopt the plan described in subsection (a)(2) of this section.

(c) Unless otherwise mutually agreed by the parties, the plan described in subsection (a)(2) of this section must be implemented within 60 days of its acceptance by the grantor.

(d) A notice of cancellation or nonrenewal shall be ineffective if the distributor implements the plan described in subsection (a)(2) of this section.

(e) A cancellation or nonrenewal shall be effective immediately upon the expiration of the period provided in subsection (c) of this section if the distributor fails to implement the plan described in subsection (a)(2) of this section.

(f) Nothing in this section shall permit a distributor to attempt to cure if the only reasons identified by the grantor in the notice required under Sec. 11-1303(b)(2)(ii) of this subtitle are reasons that are not curable by the distributor.

#### Section 11-1306

If a dispute arises between the grantor and the distributor relating to the application of this subtitle, the requirements of Sec. 11-1302.1 of this subtitle, the notice of cancellation or nonrenewal, the plan for the correction of the deficiencies described by the grantor as the reasons for cancellation or nonrenewal, whether or not the distributor has complied with the plan and corrected the deficiencies described by the grantor as the reasons for cancellation or nonrenewal, or the purchase price or fair market value of any merchandise subject to repurchase under Sec. 11-1304 of this subtitle, the grantor and distributor on the request of either party shall submit the dispute to arbitration in the State under the Maryland Uniform Arbitration Act.

#### Section 11-1307

(a) The laws of the State shall apply to agreements under this subtitle to which a distributor with a principal place of business in the State is a party. This subtitle shall be construed to provide the minimum terms and conditions applicable to grantors and distributors covered by this subtitle.

(b) This subtitle does not limit or restrict the rights of a grantor or distributor at any time to seek in the State all legal and equitable remedies for any violation of this subtitle or any material breach of an agreement.

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