While many state activists and legislators are engaged in long-standing legislative dog fights to privatize wine distribution, I found this article to pose an interesting question as to whether or not privatization of the liquor industry will necessarily yield better outcomes. For a different perspective, read after the jump Tyler Colman’s: Will the Recession Liberalize Wine Laws?
Local wineries are fighting back against the proposed federal legislation , H.R. 5034. This legislation is being backed by the National Beer Association. The legislation as proposed gives individual states the power to regulate alcohol sales and distribution. For a good read on this pending legislation, read Chris Rauber’s Wine Wars.
Do you know about HR 5034? Learn more on how to “Free The Grapes”.
Pennsylvania lawmaker Mike Turzai, R-Allegheny, introduced legislation designed to create privitization of the wholesale and retail operations of the Pennsylvania Liquor Control Board. Turzai said “Government should not be in the business of selling alcohol”. He believes Pennsylvania’s current system results in higher prices and less selection for consumers. For more information read: Turzai Introduces Legislation to Privatize Sale of Wine and Spirits.
Here’s an interesting article on how a not so well established Napa winery took matters in its own hands to sell its wine in the New York and New Jersey markets when a big distributor failed to take him on as a client. For more information read: Local Winery Bypasses Distributors in New York and New Jersey.
A couple of friends of mine have recently gone into business by purchasing a 
franchise. One friend purchased a pizza franchise while the other purchased a computer repair franchise. Each is reaping the benefit of investing in an existing business model and brand for which the corporate name, logo, products, services, business and marketing processes are already in existence.
Perhaps you too are considering opening a wine or hospitality business by purchasing a “franchise”. Maybe you already own a successful wine or hospitality business model that you would like now to franchise. If so, franchising may be your path to business.
When purchasing a franchise, while you don’t own the business, you own the rights to do business under the existing brand of the original business owner. Alternatively, as an owner of a franchise, you have an opportunity to grow your existing brand as other franchisees pay fees and grow their businesses. Whether or not you have the chops to enter the world of franchising, you’ll need to consider the many advantages and disadvantages of the franchise relationship.
When purchasing a franchise, the original business owner is known as the “franchisor”. The buyer of the franchise is known as the “franchisee”. Typically the franchisor will furnish the franchisee the operational plans to get the business underway . The franchisor will assist the franchisee in the daily operations and support of its business. In exchange for the franchisor’s expertise, the franchisee, can expect to invest thousands of dollars for this support through franchise fees, royalties, equipment costs, training, marketing fees and other costs.
The franchisor will license its way of doing business to the franchisee by executing a complex legal contract known as a Franchise Agreement. The Franchise Agreement will identify both parties commitments, restrictions, specifications, obligations, income and fee payments, warranties, customer service requirements, and terms of the business relationship. The Franchise Agreement eliminates a lot of the guess work that comes with the daily decision making processes of the business.
The Federal Trade Commission (FTC) requires that disclosure documents be given to franchisees before purchasing a franchise. Franchisors are required to provide buyers with a copy of the Uniform Franchisor Offering Circular 10 days prior to executing the Franchise Agreement. This franchise disclosure document provides prospective franchisees with basic information on the franchisor’s business, background, initial investment, fees, terms, and dispute resolution processes. The more you know about the franchisor, the better informed you’ll be to make a sound business decision.
Before entering a franchise relationship, determine what kind of franchise opportunity best suits your needs and interests. If you are concerned about the numerous risks involved in going it alone in opening your wine or hospitality business than franchising may just be the right vehicle for you.
For additional resources on how to start and grow your wine or hospitality franchise the U.S. Small Business Administration offers some useful guidance to assist you in buying a franchise.
Now, is there a wine or hospitality franchise in your future?
A couple of months ago, I had the wonderful opportunity to speak with Liz Stamp, 
owner of Lakewood Vineyards, located in the Finger Lake Region of New York. Liz shared how the wineries in her area had joined together to safely handle guests participating in bus and limousine wine tours. Their goal was to minimize inebriation and inappropriate conduct amongst the tour groups. The Association’s wineries established a Safe Group Wine Tours Program wherein sponsors of the local bus and limousine wine tours are handed a Yellow Card (warning) or Red Card (access denied for the day ) if the winery believes the tour group leader is transporting unruly guests that may have had too much to drink. A Code of Conduct for Group Wine Tasting was created, identifying behaviors that would cause winery staff to raise a flag and refuse service to individuals or groups. These identified behaviors include drunkenness, damage to winery property, theft, rude language, exposure, threatening or aggressive behavior.
The wineries distribute the cards to the tour sponsor and document by way of an incident report, detailed information on the group’s behavior. The winery owner then calls ahead to the next winery on the trail to notify the tasting room staff that the flagged group may be headed their way. This allows the next winery owner on the trail the opportunity to decide whether or not to serve the group.
The Wine Trail Association has found the program to be well received by the local tour group leaders, Too, they have discovered that the practice has been found to be effective in curtailing poor behavior.
With numerous weddings, bachelorette parties and other local events planned throughout the year, this program has been found to be a useful tool in encouraging safe and responsible alcohol consumption.
If your winery participates in a wine trail association, perhaps your association may also want to consider safe measures to protect its establishments and minimize liability as your guests proceed down the wine trail. For more information, on the Wine Trails of the Finger Lakes Region, visit www.groupwinetours.com
The New Jersey State Senate has recently approved legislation allowing New Jersey residents to receive direct shipments of wine. If this law is enacted, New Jersey would join thirty-five other states that currently have legislation that allow direct wine shipment. For more information read: N.J. Gets Closer To Allowing Direct Wine Shipments With Senate Approval.
Pennsylvania’s own Lehigh Valley’s Pinnacle Ridge Winery made the cover of this month’s Vineyard & Winery Management Magazine. Noted for its critical acclaim and loyal following, Pinnacle Ridge Winery is highlighted as a model for success for which others can follow. For more information on Pennsylvania’s own, read here: Pinnacle Ridge Winery
Do you already own your own wine or hospitality business and now want to merge your business expertise with those of another? Have you contemplated a new business venture with another business
person that you think offers promise for you both?
Perhaps you’ve identified a potential business partner whose business combined with yours makes practical sense while bringing a new and different business synergy. Maybe you and your new found partner have sketched out a few ideas of what role each of you intends to play in your newly planned business venture.
Conceptually, you may have wisely given consideration to formally executing a written Partnership Agreement. But before proceeding too quickly, you may want to consider another option. Ask yourself, is a Partnership Agreement really what you need?
Maintaining your own business autonomy while still collaborating with your new business partner can be achieved with a different choice. You may want to consider creating a different kind of business marriage by executing a Consulting Agreement.
Let’s say for example, that you’re a wine sommelier. You offer wine knowledge and expertise to a wide range of hospitality and wine business clients for a fee. Your new potential business partner wants to open a new food and wine bar, but lacks your knowledge and expertise of the wine industry. Combined the two of you decide your backgrounds are complimentary and together you can maximize your business opportunities.
However, you may not want to create a business relationship wherein together you share in the profits and losses of the newly conceived food and wine bar. Yet, you want to lend your expertise to the business, get compensated for those efforts, but still maintain your own separate autonomy for your own existing business. In this instance, executing a Consulting Agreement may be the right choice for this kind of business relationship.
Executing a Consulting Agreement allows you to define your terms in advance while assuring the other person that you will provide services to them in a professional manner. In these type of agreements, the responsibilities of the Consultant are defined in writing, identifying the expected work to be performed, anticipated compensation and payment schedules, start and end dates of the work, termination and dispute resolutions for the planned business arrangement.
The Consulting Agreement can set forth whether the Consultant will work exclusively for a single client and in what markets or territories. The Consulting Agreement is also a good vehicle to use to determine whether you and the other party can have a happy business marriage without the financial investment risks that often comes with forming a partnership.
So, when that next proposal for a business marriage with another presents itself, consider whether your winery, wine, event planning or hospitality based business really needs a Partner or a Consultant.
