Chapter

Chapter 469

2004 -- H 7817 SUBSTITUTE A AS AMENDED

Enacted 07/07/04

A N A C T

RELATING TO ALCOHOLIC BEVERAGES -- LICENSES

Introduced By: Representatives T Brien, Corvese, Fox, Laroche, and Enos

Date Introduced: February 12, 2004

It is enacted by the General Assembly as follows:

SECTION 1. Section 3-5-11 of the General Laws in Chapter 3-5 entitled "Licenses

Generally" is hereby amended to read as follows:

3-5-11. Licensing of chain stores. -- (a) Licenses, except retailer's Class E, Class B,

Class B-H, Class B-L, Class B-M, and Class B-V licenses, authorized by this title shall not be

granted, issued, or transferred to or for the use of any "chain store organization," which term shall

~~mean~~ consist of any chain of retail or wholesale business or business organizations, and more

specifically defined herein, including, without limitation, grocery stores, markets, department

stores, and convenience stores, as well as retailers of alcoholic beverages, and which include

chains in which one or more stores are located outside of the state.

(b) ~~What is a chain store organization is declared to be a question of fact, and the~~

~~department is empowered to determine finally whether any applicant for the issuance, grant or~~

~~transfer of a license is acting for or on behalf of a chain store organization or a store unit of a~~

~~chain store organization.~~ The term "chain store organization" is defined to include, but not limited

to:

(1) Any group of one or more holders of Class A liquor licenses who engage in one or

more of the following practices with respect to the business conducted under such licenses, either

directly or indirectly, or have any direct or indirect beneficial interest in the following practices:

(a) Common, group, centralized or coordinated purchases of wholesale merchandise.

(b) Common billing or utilization of the services of the same person or the same entity in

the management or operation of more than one liquor licensed business.

licensed business in any advertising media.

(d) Coordinated or common planning or implementation of marketing strategies.

(e) Participation in agreed upon or common pricing of products.

(f) Any term or name identified as a chain or common entity.

(2) Any group of one or more liquor license holders who share any of the following

common features, either directly or indirectly or acquire any direct or indirect beneficial interest

in the following practices:

(a) The same director of a corporation, member of a LLC, LLP, partner in a general or

limited partnership, trustee or beneficiary of a trust.

(b) The same individual or corporate owners.

(3) Any group of one or more license holders that is found to be a "chain store

organization" as a factual matter by the department, as a result of an evidentiary hearing in

connection with any application for the issuance, grant or transfer of a license, or upon the filing

of a complaint by any member of the public.

(4) Upon a finding of violation of this section, the department shall be empowered to set

a fine up to the amount of ten thousand dollars ($10,000) per violating licensee, revoke the

license of the violator, or suspend the license of the violator for a period of time to be determined

by the department. Additionally, the department shall issue a cease and desist order against the

violating chain store entity(s) and may further order the dissolution of the violating chain store

entity(s).

SECTION 2. Chapter 3-5 of the General Laws entitled "Licenses Generally" is hereby

amended by adding thereto the following section:

3-5-11.1. Liquor franchises prohibited. – (a) To promote the effective and reasonable

control and regulation of the Rhode Island alcoholic beverage industry and to help the consumer

by protecting their choices and ensuring equitable pricing. Class A liquor license authorized by

this title shall not be granted, issued, renewed or transferred to or for the use of any liquor

franchisor or franchisee. Class A liquor license holders are expressly prohibited from utilizing

the provisions of the Franchise Investor Act, 19-28-1 et seq.

(b) Any franchise agreements involving the retail sales of alcoholic beverages are hereby

declared null and void and illegal as of the effective date of this section.

terminated by the franchisor or the franchisee within thirty (30) days of the effective date of this

section.

(d) Upon finding of a violation of this section by either the franchisor or the licensee, the

department shall be empowered to set a fine up to the amount of ten thousand dollars ($10,000)

per violating franchisor or licensee, revoke the license of the violator or suspend the license of the

violator for a period of time to be determined by the department. Additionally, the department

shall have the power to revoke or suspend the franchise registration in accordance with section

19-28.1-18 and to order it to cease and desist from all operations that are violative of the

provisions of this section.

Notwithstanding anything contained in this chapter to the contrary, this act shall not be

construed as to prevent the utilization of duly licensed professionals rendering services as

independent contractors.

SECTION 3. This act shall take effect on April 1, 2005.

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LC01944/SUB A

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