Michigan’s beer and wine franchise laws ensure real independence between the manufacturer and distributor tiers of the three-tier system. The franchise laws govern the business relationship between manufacturers (brewers and vintners) and distributors. The laws provide that family-run distributors can only be terminated by manufacturers with just cause and due process.
The law also provides a process for the manufacturer to follow if a distributor is under-performing. This process either corrects the deficiencies or allows for the lawful termination of the distributor. For distributors, the franchise law provides a degree of equity protection that encourages Michigan companies to invest in facilities, fleets, jobs and economic development in their respective communities.
Here are additional reasons why the franchise law is important:
- Prevents large beer and wine manufacturers from threatening to punish distributors when distributors pick up small manufacturers such as craft brewers and small vintners. Before Michigan’s franchise law passed in 1984, large manufacturers commonly strong-armed distributors, threatening to end their relationship if distributors picked up the brands of other manufacturers. This essentially allowed large manufacturers to prevent craft brewers and small vintners from entering the beverage alcohol marketplace. Michigan’s franchise law prevents this unfair practice.
- Encourages entrepreneurship, economic growth and consumer choices in Michigan’s beer and wine sectors. By preserving the independence of distributors, Michigan’s franchise law opened the door for our state’s now highly successful and acclaimed craft brewers and wineries to gain market access.
- Allows brewers and vintners, including craft brewers and small vintners, to set standards that distributors must follow. Michigan’s franchise law requires distributors to meet criteria and standards set by brewers and vintners for storing, delivering and marketing their products.
- Helps small producers enter new markets. Michigan’s franchise law provides cost efficiencies for small producers, by opening the door for them to use and maximize all resources and the infrastructure of their distributors. As a result, Michigan’s franchise law is directly helping small producers expand their market reach.