Alcohol Distributors Have a Right to Fair Treatment by Suppliers

As a distributor of alcoholic beverages in the Seattle area, you take certain risks. You depend on the supplier keeping up his end of the deal so that you don’t lose the product you need to operate your business. If you have exclusive distribution rights for a particular product, you need assurance that it is not being supplied to any other distributors. In the interest of fair, efficient, and competitive distribution of beverages, wholesale distributors and suppliers of spirits must adhere to certain laws in Washington State.

Summary of Protections for Distributors

Under the Revised Code of Washington 19.126.040, distributors are offered certain legal protections. In order for the following protections to be enforceable, you must have a written agreement with the supplier:

  • In order to cancel an agreement, a supplier must give you 60 days prior written notice stating all of the reasons for the cancellation. If the cause for cancellation is something you as the distributor can fix, you have 60 days to fix the problem. If you do, the cancellation notice becomes null and void.
  • As a distributor, you may sell or transfer your business, including supplier agreements, to another party if the supplier approves of the transfer in advance. Suppliers are forbidden from unreasonably delaying approval of the transfer.
  • If the supplier cancels an agreement without cause, you are entitled to compensation for existing inventory and for the fair market value of the distribution rights. If you and the supplier cannot agree on a fair market value, you must submit to binding arbitration.
  • If there are material changes to the original agreement, the revised agreement must be considered a new agreement.

While this might sound fairly straightforward, it can be much more complicated in practice, especially when a small distributor is working with a national or international supplier.

Don’t Go it Alone

It is important that you understand your rights as an alcohol distributor in Washington. If a supplier has canceled an agreement without cause or you suspect he is not upholding his end of the agreement, you may be owed compensation. Work with a Bellevue attorney who understands Washington beverage law. Call de Maar Law today to talk to our experienced beverage law attorney. We are proud to protect the rights of small business owners.

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