There are several benefits a written agreement can provide in franchise markets, as brands’ needs may not always fit well with certain wine and spirit distributors. Firstly, the agreements must follow state franchise laws. If they do, then they can ultimately provide reassurance for both parties that a healthy business relationship will be maintained. Good cause for termination, territory carve-outs, brand limitations, and a liquidated damages provision are only a few of the possible areas these agreements can establish a basis for. Rules simply being written in an agreement, however, are not always enough for them to be fulfilled. The parties should monitor each another’s performance in order to check if their partnership is healthy. Maneuvering through franchise states can be complex, but the described actions can simplify the process if properly implemented.
Source: Hinman & Carmichael LLP