Current through Register Vol. 43, No. 39, September 26, 2024
(a) Definitions. As
used in this regulation, the following terms shall have the meanings ascribed
to them:
(1) "Sale or distribution" includes
the act of leasing, renting or consigning.
(2) "Goods" means any personal property, real
property, or any combination thereof.
(3) "Other property" means a franchise,
license, distributorship or other similar right, privilege or interest.
(4) "Franchise" means a written
arrangement in which a supplier grants to a distributor a license to use a
trade name, trademark, service mark, or related characteristic, and in which
there is a community of interest in the marketing of goods or services at
wholesale, retail, by lease, agreement or otherwise, including a commercial
relationship subject to termination pursuant to K.S.A. 1989 Supp.
41-410. The arrangement grants the
distributor the right to offer, sell and distribute within this state or any
designated area, the supplier's brands of alcoholic liquors, cereal malt
beverages, non-alcoholic malt beverages or all of them as may be specified.
(b) Franchise
discrimination is prohibited.
(1) If more
than one franchise for the same brand or brands of alcoholic liquor, cereal
malt beverage or non-alcoholic malt beverages is granted to different
distributors in this state, the supplier shall not discriminate in regard to
price or availability of alcoholic liquor, cereal malt beverage or
non-alcoholic malt beverages between distributors.
(2) A supplier shall not encourage, solicit,
cause or conspire with a distributor to circumvent any laws or regulations of
the state of Kansas relating to intoxicating liquor. A supplier shall not
directly or indirectly threaten to remove or remove a line or brand from a
distributor because of the refusal or failure of the distributor to evade or
disobey any laws or regulations of the state of Kansas relating to intoxicating
liquor. A supplier shall not, directly or indirectly, threaten to change
distributors in retaliation against a distributor who refuses to circumvent any
laws or regulations of the state of Kansas relating to intoxicating liquor.
(c) All ownership
interest in a distributor's business shall be disclosed to the director.
(1) No person shall have, own or enjoy any
ownership interest in, share in the profits from or otherwise participate in
the business of any distributor in Kansas unless a full description of the
interest is furnished to the director at the time the interest arises. The
distributor shall report to the director within 20 days, any change in any
interest in the distributor's business including:
(A) Any division of the profits;
(B) any division of net or gross sales for
any purpose whatsoever;
(C) any
change in the payment of rents;
(D) any change in the ownership of any lease
or building;
(E) any change in the
ownership of any corporation that has any interest in the business or the
change of management of that corporation; or
(F) any loss or damage to goods which results
in a claim against an insurance policy.
(2) If there is common ownership or financial
interest in wholesale businesses licensed to distribute spirits or wine, either
directly or indirectly, all of these businesses shall be deemed a controlled
ownership group.
(3) The statement
of disclosure required by this regulation shall be on a form provided by the
director, shall be signed under oath and notarized and shall be an amendment to
the licensee's permanent license application on file with the director.
(4) Each license issued by the
director shall be valid as long as the licensee is actively engaged in
business. If the licensee ceases to be actively engaged in business, the
license shall be invalid and the licensee shall immediately notify the director
and return the license.
(d) Each supplier and distributor shall file
a summary of any franchise agreement with the director. The summary shall
contain:
(1) a statement identifying each
party entering into the agreement by name, address and license number;
(2) a statement describing each
geographic territory agreed upon between the distributor and supplier for which
the distributor is to sell to retailers one or more brands of the supplier's
alcoholic liquor, cereal malt beverages or non-alcoholic malt beverages;
(3) a map outlining each
geographical territory agreed to; and
(4) a statement listing all brands to be
covered by the agreement.
(e) No manufacturer, vintner, importer, or
other supplier shall grant a franchise for the distribution of a brand to more
than one distributor for all or part of any designated territory. For purposes
of identification and recognition, multiple franchises for the distribution of
spirits or wine issued to one or more persons or to two or more corporations
where an interlocking directorate exists or the same individuals are officers
or stockholders in more than one of the corporations, shall be considered one
franchise.
(f) Each spirits
distributor's franchise agreement shall describe the franchise territory by
naming each county unit encompassed. A territory shall not be smaller than a
single county, but may encompass as few as one or as many as all 105 Kansas
counties. Agreements for distribution throughout the entire state shall not
name each county by name.
(g) Each
wine and beer distributors' franchise agreement shall describe the franchise
territory using readily identifiable geographic boundaries.
(h) The terms, conditions and requirements of
this regulation are expressly made a part of the terms of each authority to do
business in Kansas granted by the director to suppliers, distillers,
manufacturers, importers, producers, shippers, or brokers.
(i)
(1) Each
supplier, importing into this state to a licensed distributor, shall apply to
the director not later than 45 days in advance for a permit to import alcoholic
liquor, cereal malt beverage or non-alcoholic malt beverages for which the
distributor does not have a franchise to sell.
(2) Each request for a permit shall
specifically identify the brand, type and quantity of the alcoholic liquor,
cereal malt beverage or non-alcoholic malt beverages to be imported into the
state. Alcoholic liquor, cereal malt beverage and non-alcoholic malt beverages
imported in accordance with this permit shall not be resold by the distributor.
(3) A copy of the permit issued by
the director shall be attached to all records and reports required by K.A.R.
14-14-8 and 14-14-10.
