Before entering into a distribution agreement, alcohol beverage producers should do their homework. Here is a list of questions to ask a potential distributor:

• Where are you doing business as a distributor?
• How long have you been in business?
• How did you get started?
• Is your state a franchise state?
• Are you affiliated with a particular large beer, wine, or spirits producer? Are you independent?
• What is your product mix?
• Do you already have products like mine? What are they? How have you increased sales over time for them?
• How much wine, beer, cider or spirits did you sell last fiscal year? How does that compare with the last 2-3 years?
• What are your total annual gross sales?
• How many employees do you have?
• How often do your sales people visit accounts?
• What length of term do you want for our agreement?
• What is the territory covered by the agreement?
• Do you have an exclusive right to sell my products in the territory?
• Is the distributor entitled to new products that the producer develops after the relationship starts?
• What, if any accounts, does the producer already work with and does the producer get to continue to handle those accounts?
• Are you willing to meet and jointly develop an annual sales and marketing plan for my brands, including sales goals, marketing activities and pricing?
• What performance standards will you agree to in writing?
• What happens if we can’t agree on sales goals and pricing?
• Is the agreement for a fixed term or does it automatically renew if the distributor meets their goals?
• Can either of us terminate the agreement if we are not happy?
• What happens at termination in terms of payments, return/buyback of product, etc.
• Who arranges for delivery of my product? When does risk of loss shift to the distributor?
• What types of insurance do you have? What are the limits of liability on the policies?
• Who pays for delivery of product to the distributor?
• How is my product shipped, stored and delivered to retailers to ensure no impairment in quality?
• Who is my sales person and/or Brand Manager?
• How long have they worked for you?
• Are they a top producer?
• Can I have my own sales people visit accounts by themselves and, if we want, in tandem with your sales force?
• Will you give me the names of all your accounts and all accounts visited to show my wine, beer, and cider?
• Who pays for samples?
• What kind of marketing events and activities will you do, when, how will they be supported, and who pays for it?
• Who pays for by the glass promotions or volume discounts?
• What monthly, quarterly and annual reports will I receive regarding orders, depletions, marketing and sales events and related costs? 

For alcohol beverage contract-related questions, please contact Chris Hermann at crhermann@stoel.com or visit http://www.stoel.com/wine-law.