0001| SENATE BILL 825 | 0002| 42ND LEGISLATURE - STATE OF NEW MEXICO - SECOND SESSION, | 0003| 1996 | 0004| INTRODUCED BY SHANNON ROBINSON | 0005| | 0006| | 0007| | 0008| | 0009| | 0010| | 0011| AN ACT | 0012| RELATING TO THE PUBLIC PEACE, HEALTH, SAFETY AND WELFARE. | 0013| | 0014| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO: | 0015| .110993.1 SENATE PUBLIC AFFAIRS COMMITTEE SUBSTITUTE FOR | 0016| SENATE BILL 825 | 0017| 42nd legislature - STATE OF NEW MEXICO - second session, 1996 | 0018| | 0019| | 0020| | 0021| | 0022| | 0023| | 0024| | 0025| AN ACT | 0001| RELATING TO THE PUBLIC PEACE, HEALTH, SAFETY AND WELFARE; | 0002| AUTHORIZING THE ACQUISITION OF RIGHTS TO DISTRIBUTE ALCOHOLIC | 0003| BEVERAGES SET FORTH IN FRANCHISE AGREEMENTS; AMENDING SECTIONS | 0004| OF THE LIQUOR CONTROL ACT. | 0005| | 0006| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO: | 0007| Section 1. Section 60-8A-7 NMSA 1978 (being Laws 1981, | 0008| Chapter 39, Section 54, as amended) is amended to read: | 0009| "60-8A-7. FRANCHISES--DEFINITIONS.--As used in Sections | 0010| 608A-7 through 60-8A-11 NMSA 1978: | 0011| A. "franchise" means a contract or agreement, either | 0012| expressed or implied, whether written or oral, between a | 0013| supplier and wholesaler, wherein: | 0014| (1) a commercial relationship of definite | 0015| duration or continuing indefinite duration is involved; and | 0016| (2) the wholesaler is granted the right to buy | 0017| and to offer, sell and distribute within this state or any | 0018| designated area thereof such of the supplier's brand of packaged | 0019| alcoholic beverages as may be agreed upon; | 0020| B. "good cause": | 0021| (1) includes failure by the wholesaler to | 0022| substantially comply with the essential and reasonable | 0023| provisions of a contract, agreement or understanding with a | 0024| supplier; | 0025| (2) includes use of bad faith on the part of | 0001| the wholesaler in carrying out the terms of the franchise; and | 0002| (3) does not include failure or refusal on the | 0003| part of the wholesaler to engage in any trade practice, conduct | 0004| or activity which may result in a violation of any federal law | 0005| or regulation or any law or regulation of this state; | 0006| C. "successor supplier" means a supplier who | 0007| obtains the right to distribute a particular brand of alcohol in | 0008| this state by acquiring that right as set forth in an existing | 0009| franchise agreement; | 0010| ~~[C.]~~ D. "supplier" means any person, | 0011| partnership, corporation or other form of business enterprise | 0012| engaged in business as a manufacturer, importer, broker or agent | 0013| which distributes any or all of its brands of alcoholic | 0014| beverages through licensed wholesalers in this state; | 0015| ~~[D.]~~ E. "termination" includes any substantial | 0016| alteration or modification of the provisions of the franchise; | 0017| and | 0018| ~~[E.]~~ F. "good faith" means honesty in fact in | 0019| the conduct or transaction concerned and the observance of | 0020| reasonable commercial standards of fair dealing in the trade as | 0021| evidenced by all surrounding circumstances." | 0022| Section 2. Section 60-8A-8 NMSA 1978 (being Laws 1981, | 0023| Chapter 39, Section 55, as amended) is amended to read: | 0024| "60-8A-8. FRANCHISES--VIOLATIONS.-- | 0025| A. The purpose of the provisions of Sections 60-8A-7 | 0001| through 60-8A-11 NMSA 1978 is to provide an equal bargaining | 0002| position between the parties and to protect the health, safety | 0003| and welfare of the citizens by ensuring that there is an orderly | 0004| and fair distribution of alcoholic beverages in the state. | 0005| B. It is a violation of Sections 60-8A-7 through | 0006| 60-8A-11 NMSA 1978 for the supplier, directly or through any | 0007| officer, agent or employee, to fail to act in good faith in | 0008| performing or complying with any terms, provisions or conditions | 0009| of the franchise, or in terminating, canceling or not renewing a | 0010| franchise with a wholesaler, unless such termination, | 0011| cancellation or failure to renew is done in good faith and for | 0012| good cause. Good cause shall not include supplier mergers or | 0013| acquisitions or consolidation of brands with one wholesaler. | 0014| C. If more than one franchise for the same brand | 0015| ~~[or brands]~~ of alcoholic beverages is originally granted to | 0016| different wholesalers in this state, it is a violation of | 0017| Sections 60-8A-7 through 60-8A-11 NMSA 1978 for any supplier to | 0018| discriminate in any of the terms, provisions and conditions of | 0019| the franchise between the wholesalers. It is not the purpose of | 0020| this section to allow suppliers to unilaterally and without good | 0021| cause or in violation of the contract change the terms of an | 0022| existing franchise or exclusive distribution agreement by | 0023| authorizing the transfer of brands to another wholesaler ~~[in~~ | 0024| ~~violation of this act]~~. | 0025| D. A successor supplier may acquire the right to | 0001| distribute a particular brand of alcohol in this state by | 0002| purchasing the brand name of the alcohol, purchasing the stock | 0003| or assets of a supplier, executing a licensing agreement or | 0004| being granted or assigned that right. A successor supplier | 0005| shall be bound by the terms and conditions of the existing | 0006| franchise agreement. It is a violation of Sections 60-8A-7 | 0007| through 60-8A-11 NMSA 1978 for a successor supplier to fail to | 0008| comply with the terms and conditions of the existing franchise | 0009| agreement." | 0010| | 0011| | 0012| | 0013| FORTY-SECOND LEGISLATURE | 0014| SECOND SESSION, 1996 | 0015| | 0016| | 0017| February 3, 1996 | 0018| | 0019| Mr. President: | 0020| | 0021| Your PUBLIC AFFAIRS COMMITTEE, to whom has been | 0022| referred | 0023| | 0024| SENATE BILL 825 | 0025| | 0001| has had it under consideration and reports same with | 0002| recommendation that it DO NOT PASS, but that | 0003| | 0004| SENATE PUBLIC AFFAIRS COMMITTEE SUBSTITUTE FOR | 0005| SENATE BILL 825 | 0006| | 0007| DO PASS, and further recommends that it be referred | 0008| to the COMMITTEES' COMMITTEE. | 0009| | 0010| Respectfully submitted, | 0011| | 0012| | 0013| | 0014| __________________________________ | 0015| Shannon Robinson, Chairman | 0016| | 0017| | 0018| Adopted_______________________ Not Adopted_______________________ | 0019| (Chief Clerk) (Chief Clerk) | 0020| | 0021| | 0022| Date ________________________ | 0023| | 0024| | 0025| The roll call vote was 6 For 0 Against | 0001| Yes: 6 | 0002| No: 0 | 0003| Excused: Garcia, E. Jennings | 0004| Absent: None | 0005| | 0006| | 0007| S0825PA1 | 0008| SENATE PUBLIC AFFAIRS COMMITTEE SUBSTITUTE FOR | 0009| SENATE BILL 825 | 0010| 42nd legislature - STATE OF NEW MEXICO - second session, 1996 | 0011| | 0012| | 0013| | 0014| | 0015| | 0016| | 0017| | 0018| AN ACT | 0019| RELATING TO THE PUBLIC PEACE, HEALTH, SAFETY AND WELFARE; | 0020| AUTHORIZING THE ACQUISITION OF RIGHTS TO DISTRIBUTE ALCOHOLIC | 0021| BEVERAGES SET FORTH IN FRANCHISE AGREEMENTS; AMENDING SECTIONS OF | 0022| THE LIQUOR CONTROL ACT. | 0023| | 0024| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO: | 0025| Section 1. Section 60-8A-7 NMSA 1978 (being Laws 1981, | 0001| Chapter 39, Section 54, as amended) is amended to read: | 0002| "60-8A-7. FRANCHISES--DEFINITIONS.--As used in Sections 608A-7 through 60-8A-11 NMSA 1978: | 0003| A. "franchise" means a contract or agreement, either ex- | 0004| pressed or implied, whether written or oral, between a supplier and | 0005| wholesaler, wherein: | 0006| (1) a commercial relationship of definite duration | 0007| or continuing indefinite duration is involved; and | 0008| (2) the wholesaler is granted the right to buy | 0009| and to offer, sell and distribute within this state or any | 0010| designated area thereof such of the supplier's brand of packaged | 0011| alcoholic beverages as may be agreed upon; | 0012| B. "good cause": | 0013| (1) includes failure by the wholesaler to | 0014| substantially comply with the essential and reasonable | 0015| provisions of a contract, agreement or understanding with a | 0016| supplier; | 0017| (2) includes use of bad faith on the part of the | 0018| wholesaler in carrying out the terms of the franchise; and | 0019| (3) does not include failure or refusal on the | 0020| part of the wholesaler to engage in any trade practice, conduct | 0021| or activity which may result in a violation of any federal law | 0022| or regulation or any law or regulation of this state; | 0023| C. "successor supplier" means a supplier who obtains | 0024| the right to distribute a particular brand of alcohol in this | 0025| state by acquiring that right as set forth in an existing | 0001| franchise agreement; | 0002| ~~[C.]~~ D. "supplier" means any person, partnership, | 0003| corporation or other form of business enterprise engaged in | 0004| business as a manufacturer, importer, broker or agent which | 0005| distributes any or all of its brands of alcoholic beverages | 0006| through licensed wholesalers in this state; | 0007| ~~[D.]~~ E. "termination" includes any substantial | 0008| alteration or modification of the provisions of the franchise; | 0009| and | 0010| ~~[E.]~~ F. "good faith" means honesty in fact in the | 0011| conduct or transaction concerned and the observance of | 0012| reasonable commercial standards of fair dealing in the trade as | 0013| evidenced by all surrounding circumstances." | 0014| Section 2. Section 60-8A-8 NMSA 1978 (being Laws 1981, | 0015| Chapter 39, Section 55, as amended) is amended to read: | 0016| "60-8A-8. FRANCHISES--VIOLATIONS.-- | 0017| A. The purpose of the provisions of Sections 60-8A-7 | 0018| through 60-8A-11 NMSA 1978 is to provide an equal bargaining | 0019| position between the parties and to protect the health, safety | 0020| and welfare of the citizens by ensuring that there is an orderly | 0021| and fair distribution of alcoholic beverages in the state. | 0022| B. It is a violation of Sections 60-8A-7 through | 0023| 60-8A-11 NMSA 1978 for the supplier, directly or through any | 0024| officer, agent or employee, to fail to act in good faith in | 0025| performing or complying with any terms, provisions or conditions | 0001| of the franchise, or in terminating, canceling or not renewing a | 0002| franchise with a wholesaler, unless such termination, | 0003| cancellation or failure to renew is done in good faith and for | 0004| good cause. Good cause shall not include supplier mergers or | 0005| acquisitions or consolidation of brands with one wholesaler. | 0006| C. If more than one franchise for the same brand ~~[or~~ | 0007| ~~brands]~~ of alcoholic beverages is originally granted to | 0008| different wholesalers in this state, it is a violation of | 0009| Sections 60-8A-7 through 60-8A-11 NMSA 1978 for any supplier to | 0010| discriminate in any of the terms, provisions and conditions of | 0011| the franchise between the wholesalers. It is not the purpose of | 0012| this section to allow suppliers to unilaterally and without good | 0013| cause or in violation of the contract change the terms of an | 0014| existing franchise or exclusive distribution agreement by | 0015| authorizing the transfer of brands to another wholesaler ~~[in~~ | 0016| ~~violation of this act]~~. | 0017| D. A successor supplier may acquire the right to | 0018| distribute a particular brand of alcohol in this state by | 0019| purchasing the brand name of the alcohol, purchasing the stock | 0020| or assets of a supplier, executing a licensing agreement or | 0021| being granted or assigned that right. A successor supplier | 0022| shall be bound by the terms and conditions of the existing | 0023| franchise agreement. It is a violation of Sections 60-8A-7 | 0024| through 60-8A-11 NMSA 1978 for a successor supplier to fail to | 0025| comply with the terms and conditions of the existing franchise | 0001| agreement." | 0002| | 0003| |