{"data":{"id":"us-ky/krs-244.606","jurisdiction":"us-ky","citation":"KRS 244.606","heading":"Contents of agreement among brewer, importer, and distributor --","body":"Conditions for transfer of brands from brewer or importer -- Conditions for\ntermination -- Duties -- Damages.\n(1) Every brewer and importer of malt beverages shall contract and agree in writing\nwith each of its distributors to provide and specify the rights and duties of the\nbrewer, the importer, and the distributor with and in regard to the sale of the\nproducts of the brewer or the importer within the Commonwealth of Kentucky. The\nterms and provisions of the contracts shall comply with and conform to KRS\n244.602 to 244.606 and to all other applicable statutes.\n(2) If a particular brand or brands of malt beverage are transferred by purchase or\notherwise from a brewer or importer, the succe ssor brewer or importer, and the\nsuccessor brewer's or importer's designee, shall comply with the following:\n(a) The successor brewer or importer shall notify the existing distributor of the\nsuccessor's intent not to appoint the existing distributor for al l or a part of the\nexisting distributor's territory for the product. The successor shall mail the\nnotice of termination by certified mail, return receipt requested, to the existing\ndistributor. The successor shall include in the notice the names, addresses, and\ntelephone numbers of the successor's designees;\n(b) A successor's designee shall negotiate with the existing distributor to\ndetermine the fair market value of the existing distributor's right to distribute\nthe product in the existing distributor's te rritory immediately before the\nsuccessor acquired rights to the particular brand or brands of malt beverage.\nFor the purposes of this paragraph, fair market value shall be the value that\nwould be determined in an arm's length transaction entered into witho ut\nduress or threat of termination of the existing distributor's right and shall\ninclude all elements of value, including goodwill and going-concern value;\n(c) The existing distributor shall continue to distribute the product until payment\nof the compensat ion agreed to under paragraph (b) of this subsection or\nawarded under paragraph (d) of this subsection is received;\n(d) The successor's designee and the existing distributor shall negotiate in good\nfaith. If the parties fail to reach an agreement not later  than thirty (30) days\nafter the existing distributor receives the notice under paragraph (a) of this\nsubsection, the successor's designee or the existing distributor may send a\nwritten notice to the other party and the American Arbitration Association, or\nits successor in interest, declaring the party's intention to proceed with final\nand binding arbitration administered by the American Arbitration Association\nunder the American Arbitration Association's Commercial Arbitration Rules.\nThereafter, an arbitration shall be held for the purpose of determining the fair\nmarket value of the existing distributor's right to distribute the product in the\nexisting distributor's territory immediately before the successor acquired rights\nto the particular brand or brands  of malt beverage. For the purpose of this\nparagraph, fair market value shall be the value that would be determined in an\narm's length transaction entered into without duress or threat of termination of\nthe existing distributor's right and shall include al l elements of value,\nincluding goodwill and going-concern value;\n(e) Notice of intent to arbitrate shall be sent, as provided in paragraph (d) of this\nsubsection, not later than thirty -five (35) days after the existing distributor\nreceives notice under par agraph (a) of this subsection. The arbitration\nproceeding shall conclude not later than forty -five (45) days after the date the\nnotice of intent to arbitrate is mailed to a party;\n(f) Any arbitration held pursuant to this subsection shall be conducted in t he city\nwithin Kentucky that:\n1. Is closest to the existing distributor; and\n2. Has a population of more than twenty thousand (20,000);\n(g) Any arbitration held pursuant to this subsection shall be conducted before one\n(1) impartial arbitrator to be selected by the American Arbitration Association.\nThe arbitration shall be conducted in accordance with the rules and procedures\nof the American Arbitration Association;\n(h) An arbitrator's award in any arbitration held pursuant to this subsection shall\nbe monetary only and shall not enjoin or compel conduct. Any arbitration held\npursuant to this subsection shall be instead of all other remedies and\nprocedures;\n(i) The cost of the arbitrator and any other direct costs of any arbitration held\npursuant to this subsection shall be equally divided by the parties engaged in\nthe arbitration. All other costs shall be paid by the party incurring them;\n(j) The arbitrator in any arbitration held pursuant to this subsection shall render a\ndecision not later than thirty (30) days after the conclusion of the arbitration,\nunless this time period is extended by mutual agreement of the parties or by\nthe arbitrator. The decision of th e arbitration is final and binding on the\nparties. Under no circumstances may the parties appeal the decision of the\narbitrator;\n(k) A party who fails to participate in the arbitration hearings in any arbitration\nheld pursuant to this subsection waives all  rights the party would have had in\nthe arbitration and is considered to have consented to the determination of the\narbitrator;\n(l) If the existing distributor does not receive payment from the successor's\ndesignee of the compensation under paragraph (b) or (d) of this subsection not\nlater than thirty (30) days after the date of the settlement or arbitration award:\n1. The existing distributor shall remain the distributor of the product in the\nexisting distributor's territory to at least the same extent that  the existing\ndistributor distributed the product immediately before the successor's\ndesignee acquired rights to the product; and\n2. The existing distributor is not entitled to the settlement or arbitration\naward;\n(m) Nothing in this section shall be const rued to limit or prohibit good -faith\nsettlements voluntarily entered into by the parties; and\n(n) Nothing in this section shall be construed to give the existing distributor or a\nsuccessor's designee any right to compensation if the existing distributor or\nsuccessor's designee is terminated by a brewer or importer pursuant to\nsubsection (4) of this section.\n(3) The terms or provisions of any contract or agreement among any brewers,\nimporters, or distributors, including contracts or agreements entered into a fter July\n13, 2004, and any renewals or extensions of contracts existing prior to July 13,\n2004, shall not permit a brewer or importer of malt beverages to, nor may any\nbrewer or importer:\n(a) Terminate, refuse to renew, or refuse to enter into an agreemen t, in part or in\nwhole, with a distributor, except for good cause and in good faith;\n(b) Terminate, refuse to renew, or refuse to enter into an agreement, in part or in\nwhole, with a distributor without first giving the distributor written notice of\nany alleged deficiency on the part of the distributor and giving the distributor\na reasonable opportunity of sixty (60) to one hundred twenty (120) days to\ncure the alleged deficiency;\n(c) Unreasonably withhold timely consent to a proposed sale or transfer, in part or\nwhole, of the stock or assets of the distributor, and in no event shall the\nbrewer take more than thirty (30) days to approve or disapprove the proposed\nsale or transfer after the brewer has received written notice of the proposal\nfrom the distribut or and received all requested information from the\ndistributor to enable the brewer to pass upon the proposed sale or transfer;\n(d) Assign an agreement, in part or in whole, with a distributor, except with\nconsent from the distributor which shall not be un reasonably withheld. No\nconsent is required where the distributor has proposed to transfer an\nownership interest in its business and the brewer exercises its right to\npurchase this ownership interest in accordance with a written agreement\nbetween the brewe r and distributor, subject to the brewer or its designee\npurchasing the ownership interest at the price and on the conditions applicable\nto the proposed change.\n(e) Enter into a contract with more than one (1) distributor to sell any of its\nproducts or bra nd within the same territory or area at the same time. This\nparagraph shall not apply to contracts entered into prior to January 1, 2004, or\nfuture renewals of such contracts, to the extent the existing contract and the\nfuture renewal allow different distr ibutors to sell certain but not all of the\nbrewer's or importer's brands or brand extensions within the same territory or\narea at the same time;\n(f) Unilaterally amend its agreement, or any document referred to or incorporated\nby reference in its agreement , with any distributor, except modifications\ncontemplated by the brewer -distributor agreement which modifications occur\nafter written notice to the distributor or amendments that occur by a brewer\nafter having consulted with an advisory panel of distributors;\n(g) Terminate an agreement with a distributor because the distributor refuses or\nfails to accept an unreasonable amendment to the agreement proposed by the\nbrewer or importer;\n(h) Require a distributor to arbitrate disputes which may arise between it a nd the\nbrewer or the importer;\n(i) Preclude a distributor from litigating in state or federal courts located in\nKentucky or from litigating under the laws of the Commonwealth;\n(j) Unreasonably discriminate or retaliate against its distributor in the applic ation\nof the terms of a written agreement;\n(k) Unreasonably fail to consent to the distributor's designation of an individual as\nthe distributor's manager or successor -manager in accordance with\nnondiscriminatory and reasonable qualifications and standards; or\n(l) Withdraw approval of an individual as the distributor's manager or successor -\nmanager without just cause.\n(4) Notwithstanding the provisions in subsection (3) of this section, a brewer or\nimporter of malt beverages may terminate an agreement with a  distributor if any of\nthe following occur:\n(a) The assignment or attempted assignment by the distributor for the benefit of\ncreditors, the institution of proceedings in bankruptcy by or against the\ndistributor, the dissolution or liquidation of the distri butor, the insolvency of\nthe distributor or the distributor's failure to pay for malt beverages in\naccordance with the agreed terms;\n(b) Failure of any owner of the distributor to sell his or her ownership interest\nwithin one hundred twenty (120) days after the later of the owner having been\nconvicted of a felony which, in the sole judgment of the brewer, may\nadversely affect the goodwill or interests of the distributor or the brewer, or\nthe brewer learns of the conviction;\n(c) Fraudulent conduct of the dis tributor in any of its dealings with the brewer or\nthe brewer's products;\n(d) Revocation or suspension for more than thirty -one (31) days of the\ndistributor's federal basic permit or any state or local license required of the\ndistributor for the normal operation of its business;\n(e) Sale of malt beverages by a distributor outside its sales territory prescribed by\nthe brewer in accordance with KRS 244.585; or\n(f) Without brewer consent, the distributor engaging in cha nges in ownership or\npossession of ownership interests, the establishment of trusts or other\nownership interest, entering into buy-sell agreements, or granting an option to\npurchase an ownership interest.\n(5) During the term of a contract or agreement betw een the brewer or importer and a\ndistributor, including contracts or agreements in existence prior to July 13, 2004,\nthe distributor shall, in accordance with the provisions of such contract or\nagreement, maintain physical facilities and personnel so that the product and brand\nof the brewer or importer are properly represented in the territory of the distributor,\nthe reputation and trade name of the brewer or importer are reasonably protected,\nand the public is serviced. The brewer, importer, and distributo r shall act in good\nfaith at all times during the term of the contract or agreement.\n(6) Any brewer, importer, or distributor who violates any provision of this section shall\npay the injured brewer, importer, or distributor all reasonable damages sustained  by\nit as a result of the brewer's, importer's, or distributor's violations, together with the\ncosts and attorney's fees incurred by the brewer, importer, or distributor in\nprotecting its right. If a brewer or importer violates subsection (3)(a), (b), or ( g) of\nthis section, the injured distributor's reasonable damages shall be the fair market\nvalue of the distributor's business. In determining the fair market value of the\ndistributor's business, proper and full consideration shall be given to all elements of\nvalue, including goodwill and going-concern value.","path":["KRS Chapter 244"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=11504","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:52:55Z","sha256":"a77438f017abd56b256a979e58bdfb67d1f92c31806d29870c49179d77a5c200","source_id":"us-ky","stale":false,"prev":"us-ky/krs-244.605","next":"us-ky/krs-244.608"},"notice":"GroundRules: Original legal text. Not legal advice."}