2021 New Mexico Statutes
Chapter 60 - Business Licenses
Article 8A - Trade Practices
Section 60-8A-8 - Franchises; violations.

A. The purpose of the provisions of Sections 60-8A-7 through 60-8A-11 NMSA 1978 is to provide an equal bargaining position between the parties and to protect the health, safety and welfare of the citizens by ensuring that there is an orderly and fair distribution of alcoholic beverages in the state.

B. It is a violation of Sections 60-8A-7 through 60-8A-11 NMSA 1978 for the supplier, directly or through any officer, agent or employee, to fail to act in good faith in performing or complying with any terms, provisions or conditions of the franchise, or in terminating, canceling or not renewing a franchise with a wholesaler, unless such termination, cancellation or failure to renew is done in good faith and for good cause. Good cause shall not include supplier mergers or acquisitions or consolidation of brands with one wholesaler.

C. If more than one franchise for the same brand or brands of alcoholic beverages is originally granted to different wholesalers in this state, it is a violation of Sections 60-8A-7 through 60-8A-11 NMSA 1978 for any supplier to discriminate in any of the terms, provisions and conditions of the franchise between the wholesalers. It is not the purpose of this section to allow suppliers to unilaterally and without good cause or in violation of the contract change the terms of an existing franchise or exclusive distribution agreement by authorizing the transfer of brands to another wholesaler in violation of this act [60-8A-7 to 60-8A-11 NMSA 1978].

History: Laws 1981, ch. 39, § 55; 1993, ch. 57, § 1.

The 1993 amendment, effective June 18, 1993, added present Subsection A and redesignated former Subsections A and B as present Subsections B and C; substituted "60-8A-7 through 60-8A-11 NMSA 1978" for "54 through 58 of the Liquor Control Act" in Subsections B and C; added the second sentences in Subsections B and C; and inserted "originally" near the beginning of the first sentence in Subsection C.

Evidence warranting appointment of second distributor. — The court's findings of fact support conclusion that supplier acted in good faith and for good cause in appointing a second distributor in New Mexico and that distributor's cause of action for violation of the franchise statutes fails where distributor consistently failed to meet sales expectations, followed a market philosophy contrary to that of supplier, failed to take sufficient steps as promised to improve its performance, and, in supplier's business judgment, failed to adequately represent supplier's product in New Mexico in light of supplier's repeated notifications of its substandard performance and attempts to anticipate improvements. State Distribs., Inc. v. Glenmore Distilleries Co., 738 F.2d 405 (10th Cir. 1984)(decided prior to 1987 amendment of Section 60-8A-7 NMSA 1978, defining "good faith").

Section not given retroactive effect. — This section was not to be applied retroactively to reach an agreement made before the act became effective, even where the termination of such agreement occurred afterwards. Southwest Distrib. Co. v. Olympia Brewing Co., 1977-NMSC-050, 90 N.M. 502, 565 P.2d 1019.

Choice of law. — Kentucky law and not the New Mexico Alcoholic Beverage Franchise Act applied to distributorship contracts, where the contracts bore a reasonable relation to the state of Kentucky and the choice of law provision therein did not violate some fundamental principle of justice. United Wholesale Liquor Co. v. Brown-Forman Distillers Corp., 1989-NMSC-030, 108 N.M. 467, 775 P.2d 233.

Am. Jur. 2d, A.L.R. and C.J.S. references. — Validity, construction and effect of state franchising statute, 67 A.L.R.3d 1299.