I’m trying to catch up a little with interesting items sent in by Bulletin readers. Last week my cable modem went down and it took a few days for the cable company to come out and replace it, so I missed a few days. It continues to amaze me how dependent I am on internet access, far more than the telephone or cable television or even my car. Despite the fact that I was born when Eisenhower was President, it’s hard to remember what it was like before the internet was such a ubiquitous feature of our modern world. I feel naked without my laptop. Anyway, this comes from Doug in Hawaii (thanks Doug) and is the Wall Street Journal article about Larry Bell’s brewery and his distributor fight in Illinois. I saw the original Journal article when it came out, but I don’t have online access to the WSJ. Happily, it was reprinted on the free site Small Biz.
Beyond Bell’s specific travails, the larger issue of franchise laws is discussed. Franchise laws are one of those things that people in the industry are familiar with but which get very little public attention. They should, because by and large franchise laws are not good for small breweries. There, of course, exceptions — good distributors who care and do a god job with smaller breweries. But in my experience I’ve heard far more horror stories about distributor mistreatment of craft brewers than the other way around.
Distributors love franchise laws, of course, because for them, in many cases, they are a legal stranglehold and something of a disincentive for distributors to actually do a good job promoting a particular brand. In some states, Nevada for example, once a brewer signs up with a distributor, no matter how bad a job they do by law they cannot switch distributors without the distributor’s consent (something which is almost never given). My understanding is that franchise laws were originally enacted to protect distributor’s from spending years building a brand in a particular market only to have the brand go to a competitor. But in most states, distributors — which despite their rhetoric are large businesses — have deep pockets to lobby politicians and get favorable legislation to protect their business at the expense of smaller, weaker microbreweries. As the Wall Street Journal touches on, that balance of power is just beginning to shift slightly, but entrenched power tends to hang on far longer than anybody ever expects, so I’m not persuaded things will change for the better anytime soon.