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Distribute contract

so today I'm going to talk about franchise and non franchise state distribution agreements and before I do so I wanted to just briefly talk about the three-tier system which I'm sure many of you already know that in the beverage alcohol industry we have three tiers in which we sell products so the first tier is the supplier manufacturer in Pierre the second is wholesaler distributor and I'm going to use both terms interchangeably and then last is the retailer and of course consumers purchase their goods from the retailer so today when we're talking about the distribution agreements we're going to be talking about the supplier or distributor level so just by way of background back in 1933 after the repeal of prohibition what happen was that beverage alcohol reverted back to the individual states so the states could decide how they could distribute the product so there were two different categories we have open States which allows private individuals to be licensed and actually distribute the product within the state and then we also have controlled States and in the control space the government would dictate how the products would be distributed within their borders so here you can see we have a map of the United States that highlights both the control and open States so the purple would be the control state which there are seventeen states in Montgomery County and then you have the open states that are in blue so I'm bringing this up just so you understand that they are there is a division between the types of states where you distribute but what we're going to do is concentrate on the open space when it relates to franchise and non franchise so in the franchise - you have a prop approximately 50% are for distilled spirits and then the percentage is a little higher for wine products and then the due diligence when you're talking about your distribution agreement or negotiating the terms with your wholesaler it's good to understand whether or not you're dealing in a France or non franchisee states now most people call me and they ask me if distribution agreements are necessary and as an attorney what do you think I say absolutely yes but there's a reason for it if not just because I want to generate some bills and do some work but there are reasons that we're going to go through here so why well when you work on your distribution agreement you're negotiating with your distributor and you're going to be talking about some of the key terms right so there's an understanding between both parties as to what's got you're going to do who does what the second it identifies the roles and responsibilities so again who is responsible for handling one aspect of this business third you're going to manage each party's expectation because you have it in writing when you first meet everything is great you have a wonderful relationship...