Ohio House to take up craft brewers franchise law debate
Ohio's craft brewery leaders have long argued that a 50-year-old law ties their hands when it comes to getting out of bad partnerships. State lawmakers could change that. The Ohio House of Representatives is set to debate the state's nearly 50-year-old state law, the Ohio Alcoholic Beverage Franchise Act, which governs the relationship between brewers and distributors, in an attempt to protect small distributors from large brewers but craft brewers argue that industry dynamics have changed since 1974. The bill proposed by Rep. Brett Hillyer, Rep. Tim Barhorst, R-Fort Loramie, and Sen. Andrew Brenner of Delaware, has introduced similar legislation in the Senate. The proposed change would allow qualifying brewers to negotiate enforceable contracts to guide their relationships with distributors. The Brewers Freedom Alliance has called for changes to the law to exempt small craft brewers from the multinational beer conglomerates to which franchise law is meant to apply.
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The Ohio House of Representatives will hear the craft brewing community’s concerns over a nearly 50-year-old state law.
Rep. Brett Hillyer, R-Uhrichsville, and Rep. Tim Barhorst, R-Fort Loramie, introduced a bill on Oct. 18 that would change the Ohio Alcoholic Beverage Franchise Act to give more freedom to small brewers.
Sen. Andrew Brenner, R-Delaware, introduced similar legislation in the Senate over the summer.
“When I learned about the current franchise law, it was clear to me this is bad business policy,” Hillyer said in a release. “With a bill in the Senate and now in the House, I am hopeful we can quickly fix this problem that has gone on for far too long.”
The franchise law governs the relationship between brewers who make the beer and distributors who transport it.
When passed in 1974, it was intended to protect small distributors from large brewers, but craft brewers in Ohio and other states have argued industry dynamics have changed and the old rules give distributors an outsized level of control over small brewers.
The law as it stands effectively supersedes actual business contracts, so normal issues such as performance standards can’t be enforced unless a distributor wants them to.
Fighting a contract could mean going to court. The proposed change would let qualifying brewers negotiate enforceable contracts to guide those relationships.
The Brewers Freedom Alliance, which formed in the spring, in a release said the proposed law change differentiates and exempts small craft brewers from the multinational beer conglomerates to which franchise law was meant to apply.
“This year, a number of our craft brewers welcomed Ohio lawmakers to tour their businesses and learn more about the craft brewing industry,” Mary MacDonald, executive director of the Ohio Craft Brewers Association, said in a release.
“We are hopeful that our lawmakers are now taking those conversations to the Ohio Statehouse. The time is now to make these changes. We want our breweries to have the opportunity to negotiate their own contracts with their wholesale partners without government interference.”
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