Okla. Stat. tit. 37A, § 37A-3-111

Immediate termination - Transfer of brand to successor brewer.

A. Except as provided in subsection G of this section, a small

brewer is not subject to the termination provisions of this section.

B. 1. Except as provided in subsection C of this section, no

brewer shall terminate a distributor agreement with any beer

distributor without establishing good cause for such termination and

unless all of the following occur:

a. the beer distributor receives written notification by

certified mail, return receipt requested, from the

brewer stating with specificity the alleged

noncompliance with the provisions of the agreement and

is afforded no less than sixty (60) days in which to

cure such noncompliance. If not capable of being

cured within the sixty-day period, the beer

distributor shall begin the cure within the sixty-day

period and diligently pursue the cure as promptly as

feasible,

b. the beer distributor fails to cure such noncompliance

within the allotted cure period, and

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c. the brewer provides written notice by certified mail,

return receipt requested, to the beer distributor of

such continued noncompliance. The notification shall

contain a statement of the intention of the brewer to

terminate the distributor agreement, the reasons for

the termination, and the date the termination shall

take effect.

2. If a beer distributor cures an alleged noncompliance within

the cure period provided in subparagraph a of paragraph 1 of this

subsection, any notice of termination from a brewer to a beer

distributor shall be null and void.

C. A brewer may immediately terminate a distributor agreement,

effective upon furnishing written notification to the beer

distributor by certified mail, return receipt requested, for any of

the following reasons:

1. The beer distributor’s failure to pay any account when due

and upon written demand by the brewer for such payment, in

accordance with agreed payment terms;

2. The assignment or attempted assignment by the beer

distributor for the benefit of creditors, the institution of

proceedings in bankruptcy by or against the beer distributor, the

dissolution or liquidation of the beer distributor, or the

insolvency of the beer distributor;

3. The revocation or suspension of, or the failure to renew for

a period of more than fourteen (14) days, a beer distributor’s

state, local, or federal license or permit to sell beer in this

state;

4. The beer distributor has been convicted of a felony that, in

the brewer’s sole judgment, adversely affects the goodwill of the

beer distributor or brewer; provided, however, an existing

stockholder or stockholders, partner or partners, or member or

members shall have the right to purchase the stock, partnership

interest, or membership interest of the offending stockholder,

partner, or member prior to the conviction of the offending

stockholder, partner, or member, subject to brewer’s approval, which

shall not be unreasonably withheld, and if the sale is completed

prior to conviction, the provisions of this paragraph shall not

apply;

5. A beer distributor has been convicted of, found guilty of,

or pled guilty or nolo contendere to a charge of violating a law or

regulation of the United States or of this state if it materially

and adversely affects the ability of the beer distributor or brewer

to continue to sell its beer in this state;

6. Any attempted transfer or change in beneficial ownership of

ten percent (10%) or more of the beer distributor, stock of the beer

distributor, or stock of any parent corporation of the beer

distributor, or any change in the ownership or control of any entity

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having control of the beer distributor, without obtaining the prior

written approval of the brewer, which may not be unreasonably

withheld and shall be based on objective requirements imposed on all
e beer

distributor, or stock of any parent corporation of the beer

distributor, or any change in the ownership or control of any entity

Oklahoma Statutes - Title 37a. Alcoholic Beverages Page 111

having control of the beer distributor, without obtaining the prior

written approval of the brewer, which may not be unreasonably

withheld and shall be based on objective requirements imposed on all

other distributors, except as may otherwise be permitted pursuant to

a written agreement between the parties;

7. Fraudulent conduct, by or on the part of the beer

distributor or any owner of the beer distributor, or by any employee

as to which the beer distributor or any of its owners or its senior

management knew or reasonably should have known, in the beer

distributor’s dealings with the brewer of beer, including the

intentional sale of beer outside the brewer’s established quality

standards; provided, however, in the case of fraudulent conduct by a

beer distributor employee other than the owner or senior management

and only in the event the beer distributor was unaware or should not

have been aware of such fraudulent conduct, the beer distributor

shall be allowed a sixty-day cure period following written notice of

such conduct from the brewer, and shall only be terminated for

failing to cure the same within sixty (60) days thereof;

8. Cessation of the beer distributor to conduct business for

five (5) consecutive business days, unless conducting the business

is prevented or rendered impractical due to events beyond the

distributor’s reasonable control as a result of an act of God, an

insured casualty, war, or a condition of national, state, or local

emergency; or

9. Any intentional sale of beer, directly or indirectly, to

customers located outside the territory assigned to the beer

distributor by the brewer unless expressly authorized by the brewer.

D. Any beer distributor terminated by a brewer under subsection

B of this section shall have the opportunity to sell the brewer’s

brand rights for one hundred twenty (120) days after termination in

accordance with the distributor agreement. If no such sale occurs,

the brewer’s newly appointed distributor shall pay the beer

distributor the fair market value of the distribution rights, which

will be lost or diminished by reason of termination, and the newly

appointed distributor shall purchase any remaining unexpired

inventory for laid in cost. If the parties cannot agree on the fair

market value, the parties shall follow the same procedures as set

forth in paragraphs 2 through 6 of subsection G of this section.

E. The brewer shall have the right to terminate an agreement

with a beer distributor at any time by giving the beer distributor

at least ninety (90) days’ written notice by certified mail, return

receipt requested; provided, the brewer shall give a similar notice

to all beer distributors in all other states with which the brewer

has a distributor agreement.

F. 1. If a particular brand of beer is transferred by purchase

or otherwise from a brewer to a successor brewer, the successor

brewer shall become obligated to all of the terms and conditions of

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the agreement in effect on the date of succession. This subsection

applies regardless of the character or form of the succession. A

successor brewer has the right to contractually require its beer

distributor to comply with operational standards of performance, if

the standards are uniformly established for all of the successor

brewer’s distributors. Provided, however, where the successor

brewer holds a brewer’s license in the state as of January 1, 2023,

and has an existing distribution agreement with a beer distributor,

the successor brewer may terminate the distribution agreement, in

whole or in part, in order to transfer the brand rights to the

successor brewer’s beer distributor with at least sixty (60) days’
brewer’s distributors. Provided, however, where the successor

brewer holds a brewer’s license in the state as of January 1, 2023,

and has an existing distribution agreement with a beer distributor,

the successor brewer may terminate the distribution agreement, in

whole or in part, in order to transfer the brand rights to the

successor brewer’s beer distributor with at least sixty (60) days’

written notice to the terminated distributor and with termination

effective upon payment to the terminated beer distributor the fair

market value of the terminated beer distributor’s business with

respect to the terminated brand or brands.

2. A successor brewer may, upon written notice, terminate its

agreement, in whole or in part, with a beer distributor of the

brewer it succeeded, for the purpose of transferring the

distribution rights in the beer distributor’s territory to a new

beer distributor, provided that the successor beer distributor first

pays to the existing beer distributor the fair market value of the

existing distributor’s business with respect to the terminated brand

or brands.

3. If the successor brewer decides to terminate its agreement

with the existing beer distributor for purposes of transfer, the

successor brewer shall notify the existing beer distributor in

writing of the successor brewer’s intent not to appoint the existing

beer distributor for all or part of the existing beer distributor’s

territory. The successor brewer shall mail the notice of

termination by certified mail, return receipt requested, to the

existing beer distributor. The successor brewer shall include in

the notice the names, addresses, and telephone numbers of the

successor beer distributor or distributors.

4. a. the successor beer distributor shall negotiate with

the existing beer distributor to determine the fair

market value of the existing beer distributor’s right

to distribute in the existing beer distributor’s

territory. The successor beer distributor and the

existing beer distributor shall negotiate the fair

market value in good faith, and

b. the existing beer distributor shall continue to

distribute in good faith until payment of the

compensation agreed to under subparagraph a of this

paragraph, or awarded under paragraph 5 of this

subsection, is received.

5. a. if the successor beer distributor and the existing

beer distributor fail to reach a written agreement on

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the fair market value within thirty (30) days after

the existing beer distributor receives the notice

required pursuant to paragraph 2 of this subsection,

the successor beer distributor or the existing beer

distributor shall send a written notice to the other

party requesting arbitration pursuant to the Uniform

Arbitration Act, Part 2 of Article 22 of Title 13,

C.R.S. Arbitration shall be held for the purpose of

determining the fair market value of the existing beer

distributor’s right to distribute in the existing beer

distributor territory,

b. notice of intent to arbitrate shall be sent, as

provided in subparagraph a of this paragraph, not

later than forty (40) days after the existing beer

distributor receives the notice required pursuant to

paragraph 2 of this subsection. The arbitration

proceeding shall conclude not later than sixty (60)

days after the date the notice of intent to arbitrate

is mailed to a party, unless this time is extended by

mutual agreement of the parties and the arbitrator,

c. any arbitration held pursuant to this subsection shall

be conducted in a city within this state that:

(1) is closest to the existing beer distributor, and
ection. The arbitration

proceeding shall conclude not later than sixty (60)

days after the date the notice of intent to arbitrate

is mailed to a party, unless this time is extended by

mutual agreement of the parties and the arbitrator,

c. any arbitration held pursuant to this subsection shall

be conducted in a city within this state that:

(1) is closest to the existing beer distributor, and

(2) has a population of more than twenty thousand

(20,000) people according to the latest Federal

Decennial Census,

d. any arbitration held pursuant to this paragraph shall

be conducted before one impartial arbitrator to be

selected by the American Arbitration Association (AAA)

or its successor. The arbitration shall be conducted

in accordance with the rules and procedures of the

Uniform Arbitration Act, Part 2 of Article 22 of Title

13, C.R.S. The AAA arbitrator shall have no fewer

than fifteen (15) years of experience in franchise law

and shall use the laws of the state where the

distributor is located and shall not use other state

laws in his or her reviews,

e. an arbitrator’s award in any arbitration held pursuant

to this paragraph shall be monetary only and shall not

enjoin or compel conduct. Any arbitration held

pursuant to this paragraph shall be in lieu of all

other remedies and procedures,

f. the cost of the arbitrator and any other direct costs

of an arbitration held pursuant to this paragraph

shall be equally divided by the parties engaged in the

arbitration. All other costs shall be paid by the

party incurring them,

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g. the arbitrator in any arbitration held pursuant to

this paragraph shall render a written decision not

later than thirty (30) days after the conclusion of

the arbitration, unless this time is extended by

mutual agreement of the parties and the arbitrator.

The decision of the arbitrator is final and binding on

the parties, but questions of error of law may be

appealed by either party to a state or federal court

in the state where the distributor is located. The

arbitrator’s award may be enforced by commencing a

civil action in any court of competent jurisdiction.

Under no circumstances may the parties appeal the

decision of the arbitrator,

h. an existing beer distributor or successor beer

distributor who fails to participate in the

arbitration hearings in any arbitration held pursuant

to this paragraph waives all rights the existing beer

distributor or successor beer distributor would have

had in the arbitration and is considered to have

consented to the determination of the arbitrator, and

i. if the existing beer distributor does not receive

payment from the successor beer distributor of the

settlement or arbitration award required under

subparagraph e through g of this paragraph within

thirty (30) days after the date of the settlement or

arbitration award:

(1) the existing beer distributor shall remain the

beer distributor in the existing beer

distributor’s territory to at least the same

extent that the existing beer distributor

distributed the beer immediately before the

successor brewer acquired rights to the brand,

and
ubparagraph e through g of this paragraph within

thirty (30) days after the date of the settlement or

arbitration award:

(1) the existing beer distributor shall remain the

beer distributor in the existing beer

distributor’s territory to at least the same

extent that the existing beer distributor

distributed the beer immediately before the

successor brewer acquired rights to the brand,

and

(2) the existing beer distributor is not entitled to

the settlement or arbitration award.

G. 1. In addition to termination rights that may be set forth

in a distributor agreement, a small brewer may terminate a

distributor agreement with any beer distributor; provided, that

prior to the effective date of the termination, the small brewer

pays the beer distributor the fair market value of the distribution

rights which will be lost or diminished by reason of the termination

and purchases, or requires the newly appointed distributor to

purchase, any remaining unexpired inventory for laid in cost.

2. If such small brewer and beer distributor cannot mutually

agree to the fair market value of the applicable distribution rights

lost or diminished by reason of the termination, then the brewer

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shall pay the beer distributor a good-faith estimate of the fair

market value of the applicable distribution rights.

3. If the beer distributor being terminated under paragraph 2

of this subsection disputes that the payment made by the small

brewer was less than the fair market value of the distribution

rights, then the beer distributor may within forty-five (45) days of

termination submit the question of fair market value of the

applicable distribution rights lost or diminished by reason of the

termination to binding arbitration before a panel of three neutral

arbitrators appointed in accordance with the commercial arbitration

rules of the American Arbitration Association, which panel shall

determine by majority decision whether the small brewer’s payment

meets the requirements of paragraph 2 of this subsection.

4. If the arbitration panel rules that the payment made by the

small brewer to the beer distributor upon termination was less than

the fair market value of distribution rights lost or diminished by

reason of the termination, then the small brewer shall pay the beer

distributor the difference between the payment made to the beer

distributor and the determined fair market value plus interest.

5. If the arbitration panel rules that the payment made by the

small brewer to the beer distributor upon termination was more than

the fair market value of distribution rights lost or diminished by

reason of the termination, then the beer distributor shall pay the

small brewer the difference between the payment made to the beer

distributor and the determined fair market value, plus interest.

6. All arbitration fees and expenses shall be equally divided

among the parties to the arbitration, except if the arbitration

panel determines that the small brewer’s payment upon termination

was not a good-faith estimate of the fair market value, then the

panel may award up to one hundred percent (100%) of the arbitration

costs to the prevailing party.

H. 1. Any beer distributor or brewer who is aggrieved by a

violation of any provision of this section shall be entitled to the

recovery of damages caused by the violation. If a beer distributor

is not terminated in accordance with the provisions of this section,

damages may additionally include the fair market value of the

distribution rights and the purchase, or the requirement that the

newly appointed distributor purchase, any remaining unexpired

inventory for laid in cost. Damages shall be sought in a civil

action in any court of competent jurisdiction.

2. Any dispute arising under this section may also be settled

by such dispute resolution procedures as may be provided by a
ude the fair market value of the

distribution rights and the purchase, or the requirement that the

newly appointed distributor purchase, any remaining unexpired

inventory for laid in cost. Damages shall be sought in a civil

action in any court of competent jurisdiction.

2. Any dispute arising under this section may also be settled

by such dispute resolution procedures as may be provided by a

written agreement between the parties.

I. Nothing in this section shall be construed to limit or

prohibit good-faith settlements voluntarily entered into by the

parties.

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J. Except as otherwise provided herein, nothing in this section

shall be construed to give a beer distributor any right to

compensation if an agreement with the beer distributor is terminated

by a brewer pursuant to this section.

K. No brewer shall require any beer distributor to waive

compliance with any provision of the Oklahoma Alcoholic Beverage

Control Act and any provisions of the Oklahoma Alcoholic Beverage

Control Act shall supersede any provisions of a distributor

agreement in conflict in this section.

L. No brewer shall charge or accept, and no beer distributor

shall pay or provide, in a material way, any money, property,

gratuity, rebate, free goods, shipping charges different than those

charged for all beer distributors, allowances, thing of value, or

other inducement, as defined in Section 3-123 of this title, from a

beer distributor in exchange for the brewer entering into a

distributor agreement with the beer distributor. However, a brewer

who also holds a beer distributor license and desires to sell all or

a portion of its beer distribution rights and business, or a holder

of a small brewer license who desires to change its election from

self-distribution to the use of a distributor agreement, may accept

a payment for the fair market value of its existing and established

distribution business in the subject territory.

M. This section shall apply to any agreement entered into and

any renewals, extensions, amendments, or conduct constituting a

modification of a distributor agreement by a brewer or cider

manufacturer.

N. Where a cider manufacturer distributes cider through a beer

distributor, the rights and obligations of the cider manufacturer,

the distributor, a successor cider manufacturer, and a successor

distributor shall be the same as the rights and obligations provided

in this section for a brewer, beer distributor, successor brewer,

and successor beer distributor.