Enforcing Your Trademarks: How Far Should You Go?

Legal Protection word cloud concept

By: Brian D. Kaider, Esq.

You’ve secured federal registration for your trademarks and you’ve been building your brand recognition.  Per your trademark attorney’s recommendation, you’ve had quarterly searches conducted to find similar marks.  Lo and behold, a new entry to the market is using your trademark.  Now what?  Stop and take a breath; let the initial surprise or anger settle. There is a lot to consider before taking any action.

Take Stock of the Situation

  First, take a look at your own trademark.  Is it the name of your winery or of one of your products?  Is it a national brand or one that is distributed in a small geographic area?  In what classes of goods and services is it registered (e.g., class 033 for wine, class 040 for “custom production of wine for others,” etc.)?

  Then look at the competitor’s mark.  Is the mark identical to yours or similar?  How similar?  Is it broadly distributed?  Is it used for the same goods and services as your mark?  If not, how similar are the goods and services?  Are your products marketed through the same trade channels?  Are consumers likely to encounter both your products and theirs?  Have they attempted to register their trademark and, if so, where are they in that process?

  No one question will be determinative in any given case, but on balance, they will help develop a sense of how much effort should be expended to enforce your rights.  As discussed below, there are numerous paths, each with its own set of risks and potential rewards.  An international brand that is known throughout the industry, like E. & J. Gallo, must be far more protective of its Gallo® mark than a small winery in Oregon that has a registered trademark for a rosé product only distributed in the Pacific Northwest.

First Contact

  As the owner of a registered trademark, it is your duty to “police” your mark; that is, to monitor unauthorized use of your mark by others and to enforce your right to exclusivity of that mark.  When large corporations learn of potential infringement, their immediate response is generally to have their attorneys send a cease and desist (C&D) letter.  For smaller companies, a personal attempt to contact the owner of the infringing business is often effective.  Sometimes the other party simply did not know about your mark.  If you found their use of the mark before they spent considerable time and money developing it as a brand, they may be willing to simply let it go.

  When making these calls, it is important to maintain a demeanor that is both friendly and firm.  There is no need to accuse the other side of wrong-doing or of violating your trademark knowingly.  However, you should simply let them know that you do have a registration for the mark and that their use is likely to cause confusion in the market as to the source of your respective goods.  If you give them a reasonable amount of time to work through any inventory bearing the infringing mark and to rebrand, this can often be the end of the matter.

Cease and Desist Letter

  If the friendly approach doesn’t work, the next step is generally a cease and desist letter.  This is most effective if drafted and sent by an attorney.  The tone of these letters tends to be more matter-of-fact.  They identify your trademark(s); explain that you have spent a considerable amount of time, effort, and money to build your brand around the mark; identify the other party’s infringing use; state that the use is unauthorized and likely to cause economic harm and loss of goodwill in your brand; and demand that they stop using the mark within a given time frame.

  While these letters can sometimes be effective, especially against smaller companies, they have become so commonplace that often they are simply ignored by more savvy companies who may wait to see if further steps are taken before deciding whether to rebrand.  Accordingly, you should carefully weigh all of your options and decide in advance whether you will escalate the matter if your C&D letter is ignored.

Trademark Opposition

  If the other side has attempted to register their mark, there is a narrow window of opportunity for you to challenge their application before it registers.  If, after conducting a search of other marks, the U.S. Patent and Trademark Office (USPTO) determines that the mark is registerable, it will publish the mark in the Official Gazette.  This publication opens a 30-day window for anyone who believes they will be harmed by registration of the mark to file an opposition to the application.  

  This process should not be entered into lightly.  In some cases, simply filing the opposition will be enough to get the other side to give up its mark.  But, if they choose to fight the opposition, you will find yourself in a litigious process that takes time, effort, and money to complete.  As in civil litigation, the parties to an opposition file motions and briefs, request documents from the other side, take depositions, serve interrogatories that must be answered, and present their evidence to the Trademark Trials and Appeals Board for its consideration. 

  If the opposition goes all the way to the trial stage, it will generally take at least 18 months from when the notice is filed to when the last brief is due and will cost each side in the tens of thousands of dollars.  As with civil litigation, most oppositions do not reach the trial stage, because the parties are able to come to terms and settle the dispute on their own.  But, this often does not occur until sometime in the discovery phase, after both sides have spent a considerable amount on legal fees.

  It is important to note that the object of an opposition proceeding is to prevent registration of the other side’s trademark and, if you are successful, that is your sole remedy.  There are no monetary damages awarded, nor can you recover your legal fees from the other side.  Moreover, while they will lose their ability to register their trademark, it does not necessarily mean the other side will stop using the mark on their goods or services.  In that case, you would have to file a trademark infringement litigation (see below) to get them to stop using the mark, entirely.  In practical terms, succeeding in an opposition will often be enough to get the other side to abandon their mark, because if you were to follow through with a civil litigation, they could be on the hook for treble damages for willful infringement.

Trademark Cancellation

  If you discover the other side’s trademark application after the 30-day opposition window has expired, your only option to challenge the mark at the USPTO is to wait until the trademark actually registers and then to file a trademark cancellation proceeding.  Though there are some differences between cancellation and opposition proceedings, particularly if the challenged mark has been registered for more than five years, they are similar in most procedural respects. 

Trademark Infringement Litigation

  As one might expect, filing a trademark infringement case in federal court is the nuclear option.  Depending upon the jurisdiction, the time frame for completing a litigation may be faster or slower than an opposition or cancellation proceeding at the USPTO.  But, whereas those procedures will likely cost the parties tens of thousands of dollars, a civil litigation will likely reach six figures, or more. 

  The reason for this higher cost is that there are more issues to consider in these cases.  If  your are successful in a civil litigation, you may not only obtain injunctive relief, foreclosing the defendant from all future use of the mark, but also may obtain monetary damages associated with the defendant’s past use of the mark, as well as attorney’s fees expended in the proceeding.  Moreover, if the defendant is found to have willfully infringed your trademark, they may be required to pay treble damages. 

  These issues, which are not even addressed in an opposition/cancellation, add breadth to the scope of discovery taken, which increases the cost.  Further, whereas most opposition/cancellation proceedings are decided without an oral hearing, a civil litigation generally requires live testimony and argument in front of a judge or jury.  These proceedings require a great deal of attorney preparation, dramatically increasing legal fees.


  As the owner of a valid trademark registration, you are obligated to police your mark and failure to do so can result in a dramatic diminishment of your rights or even outright abandonment of your registration.  But, that does not mean you have to file a civil litigation against every minor infringement.  Determining the appropriate path in any given situation requires a careful evaluation of all the circumstances and balancing the risks of action versus inaction.  It is critical to engage a knowledgeable trademark attorney, who will properly assess these risks, your likelihood of success, and the most effective course of action in your case.  

  Brian Kaider is a principal of KaiderLaw, an intellectual property law firm with extensive experience in the craft beverage industry.  He has represented clients from the smallest of start-up breweries to Fortune 500 corporations in the navigation of regulatory requirements, drafting and negotiating contracts, prosecuting trademark and patent applications, and complex commercial litigation. 

bkaider@kaiderlaw.com or call (240) 308-8032

Dealing With Contracts

Winery and Vineyard operations are a happy mix of old world charm with agricultural roots, where a neighbors word was as ‘good as gold’ and a handshake was an iron clad agreement, mingled into the modern world with exposures  that are more diversified and with specialized job duties, broader national reach and the increasing litigious environment.

  Contracts can be quite intimidating, confusing and even deceptive at times.

Contract ATips

  Before we get started, as with all editorial information, this should in no way be considered legal advice.  Please contact your attorney for all legal advice specific to your needs or situation.

For simplicity, we will look at two main views; contracts that you create and have others sign and the contracts that you sign as a winery/vineyard operation.

Contracts You Create

  Some of the most common agreements or contracts that a winery and vineyard operation creates can include worker contracts, processing contracts and vendors.

  Depending on the circumstance, contracts for workers need to be clear on employment relationships as an employee, subcontractor or increasingly, a co-employee through a Professional Employer Organization (PEO). 

  The winery industry has a wide breath of operations with the larger accounts that need H-2A seasonal workers contracts to the sole proprietorship where the labor is all family.  A contract should be specific on the conditions and expectations for both parties.

  In processing, there are custom crush operations that handle the complete cycle of wine production from crush to storage, down to a single task process, like using a mobile bottler.  Contracts can relate to a transportation exposures where a hired contractor is used to move the stock between locations or a storage warehouse exposure that needs to address the conditions and the insurance responsibility for the wine value.

  Consider the time element and any penalties associated if an operation under contract fails to meet expectations.

Contracts You Sign

  If you have a contract with a bottle manufacturer, cork maker, label printer, bottle filler and transportation company, do they line up with the timing and expectations to make sure your production is a success? 

  If you are responsible for the production operations, are there service contracts in place for the equipment if a part or service is needed at a crucial time in production? 

  Another common contract to the business is the Lease Agreement.  The basics are familiar to most, with renting a location to run an operation, having a monthly fee and a term agreement are very generic.  The contract can also have specifics as to the type of operations and alterations allowed.  It may be OK to make wine but not allow pressure vessels or brewery operations.  You can have the tenant improvements and betterments with installing a tasting bar, but no authority to add a kitchen space. 

  Contractors and vendors can also require a winery or vineyard to sign a contract.  Examples include a band playing on the stage, craft vendors at the harvest festival or food services.  In the best interest of the winery, the contract should address the insurance aspects of the agreement.  Each of the details in the contract should be viewed through the lens of the risk manager.  A contract should be clear and valid but remember, it is not an insurance solution.  The contract should address the specific insurance requirements needed.

  Insurance policies can also be considered a contract. Verify the language on your insurance policy protects and defends the winery.  The language should be clear to both the scope and the limit of insurance required.  In most cases, providing proof of insurance with the adequate limits is enough justification for the insurance clause.  Taking it one step further, the contract may require the signer to add the winery as an Additional Insured for events that are hosted on the insured property.

  In many cases, having a contract in force can be one of the triggers on many insurance policies that allow for an additional insured status to apply. 

  After the contract is properly executed and additional insured status is secured, the insured should verify that the limits of insurance available are at least equal to the limits under their commercial general liability policy.

  Time to ‘punch down’ and get a little more flavor.  When we switch gears and look at contracts the winery/vineyard operation is being requested to sign, paying close attention to details is paramount.  Signing a contract without understanding the consequence can have huge implications on your business.

  The nature of operations in the industry has many vendor exposures, whether as a festival booth or as a supplier to a restaurant or grocery chain.  Many of these contracts will have a requirement for limits as well as an indemnification clause that requires an additional insured status under the winery/vineyard insurance protection.  The contracts can get detailed with requesting high limits, giving up rights to subrogation of a loss or to ignore negligent acts. 

  One important point in reviewing a contract is to understand from an insurance standpoint, if you agree to a condition in a contract, is it something your insurance policy will cover?  If you sign a contract that is not supported by your insurance policy, you could be responsible for payments in the agreement that are not payable by the insurance carrier.  Failure to satisfy a contract may not be related to a covered cause of loss under the insurance language.

  As a vineyard, do you have a contract to be a supplier to a winery, in which the contract states if you fail to provide a certain volume you would owe a penalty?

  As a custom crush operation, are you under contract agreement to produce a product in a certain timeframe?  Are you contractually obligated to insure the wine stock of others at a certain settlement price?

  As a vendor in a national chain store, are you required to carry higher limits of insurance or coverage lines such as auto and worker compensation?

It may be difficult to do business today without contracts in one aspect of your operation or another.  Having the right contract in place can be a form of risk management, but can also be a source of liability on your operations.

  Not every business is the same and in fact one of the hallmarks of the industry is to celebrate the differences in both product and experience.  This creates a unique situation that should have an equally unique contract for the specific needs.  It is best practice to have professional legal counsel in drawing up any contract in lieu of the generic options.

  Ideally contracts will be written with clear and simple language that will address the relationship and expectations for the situation.

  The subject matter of contracts is complicated and often creates confusion. It is important for operations to begin considering some of the issues BEFORE a loss or conflict occurs.

  The best contract you can enter in, is a high quality insurance policy.  The insurance policy is a contract agreement that is signed by both parties.  Although it can be somewhat complex in the language, the details of the contract indicate the expectations of both parties and what is to happen if certain criteria is met, what coverages are included, what responsibilities are required for the insured and what promises of settlement are made by the carrier.  Insurance can play a major role in working with the various business contracts.

  As contract partners, it is recommended you work with your insurance agent or carrier to review any contract agreement to determine how it will affect your liabilities and to confirm if additional risk management tools may be needed.

Top 3 Tips for Contracts

  • 1. Get it in writing.
  • 2. Keep it simple in language and form.
  • 3. Seek professional advice from your insurance advisor and legal counsel.

For more information, please, contact us Markel Personal Lines or 262-548-9180.

Fruitful Partnerships: Family-Run Vineyards and Wineries

Mercer Family Estate, Horse Heaven Hills, Washington

By: Cheryl Gray

From grapes to glass, teamwork is at the top of the list of requirements for any successful vineyard  or winery.  And what of the extras that come into play if that team happens to be family? 

  Just ask Brenda Mercer of Mercer Family Vineyards, whose family settled in the Prosser, Washington area in 1886, before Washington became a state.  Three Mercer brothers, Don, Bud and Rick, founded  the fifth-generation enterprise right in the heart of what is now the world-renowned, grape-growing Yakima Valley. 

  “They moved out to the Horse Heaven Hills after World War II to run a cattle and sheep operation, initially.  As things progressed and irrigation water became available, the Mercer (Ranches) began growing row crops such as sugar beets and potatoes.  Under the recommendation of Dr. Walter Clore, Don and Linda Mercer planted the very first wine grapes in the HHH in 1972 on what is now known today as Champoux Vineyard.” 

  Mercer adds that the family has incorporated education and technology into the variety of wine grapes they produce, spread across at least a half-dozen vineyards totaling nearly 1,000 acres.  ”There is a great deal of education and training happening in our neck of the woods in the field of agriculture and viticulture.  We are blessed to have the WSU (Washington State University) Wine Science Center in our back yard.  But even with education and outside training, a lot of knowledge is still gained by hands on experience. “

  John Derrick, Vineyard Manager for Mercer Ranches, has been with the family for three generations.  Derrick points out that the success of this family-run business has always included collaborating with educational partners who are in the region. “We are lucky enough to work with WSU, WSU Tri-Cities, Yakima Valley Community College, Walla Walla Community College and LAEP (Latino Agricultural Education Program).  We also work directly with educators and extension in the vineyard doing experiments and collaborating on new ideas and products. Working with the programs above, we have built up a great team here at Mercer Ranches. “

  Derrick adds that Mercer Ranches has recently placed emphasis on expanding its vineyard operations, providing, he says, the perfect opportunity to try new methods and ideas.  “I have always appreciated     the family’s willingness to try something new and I have seen that first hand with three generations now.  Mercer Ranches was well positioned to mechanize the vineyards because of the vision and drive  provided by Rob (Mercer).”

  Brothers Rob and Will Mercer, both of whom attended Washington State University, have been running the family business since 2010.  Rob is in charge of the farming and viticulture operations.  Will serves as General Manager at Mercer Estates.  In fact, many of the Mercer family offspring either currently work or have worked the farm and vineyards    Liz Mercer-Elliott, another WSU graduate who also trained in winemaking at Hogue Cellars, runs the company’s Carma Wine Club out of its Prosser Tasting Room.  Calvin Mercer, another WSU graduate, runs Austin Sharp Vineyard.  Still other family members have worked in many different facets of the company.

  According to Andrew Martinez, Head Winemaker of Martinez Vineyard & Winery, the Mercer family helped to bring to life his own family’s dream of operating a vineyard and winery in Yakima Valley.  Martinez says his immigrant father, Sergio, and mother, Kristy, a Washington native, bought and planted clones from Don and Linda Mercer back in 1981, planting three acres of Cabernet Sauvignon on property the Martinez family bought on Phinny Hill in the Horse Heaven Hills in 1978.  Martinez was born a year and a half after his father planted the family’s first vineyard. 

  “Helping to lay irrigation, plant grapes, sucker, prune, hoe weeds, shoot thin, and harvest are all things that were fairly normal chores in my upbringing. All the hard work that is spent in the vineyard is the reason for realizing the need to go to college for a better life.”  Martinez graduated from Yakima Valley Community College with a degree in Science and attended as many wine-making seminars and other educational outreach programs as he could.  He honed his wine-making skills four days out of the week while working as a dental hygienist part-time.  In the meantime, Martinez says that his wife, Monica,   who also grew up on a farm and whose grandfather, he says, was among the first winemakers in Prosser making wine from Washington grapes, earned her MBA.  The couple’s return on investment in education, Martinez says, has greatly benefitted the family business.  “Needless to say, wine and grape growing runs thick in our blood.  Monica’s MBA and my Science degrees have helped the vineyard and winery be elevated with tools they needed to be more successful.”

  Martinez says the family made the leap from grape growers to wine makers in 2005.   “… I talked my dad into making two barrels of wine for our first 50 cases. For years, we had sold the grapes but now, it was time to start utilizing them ourselves. It was time to show all the hard work and dedication in the vineyard to everyone!  Barrel-aging wines for 24 months, we had time to stockpile vintages and slowly increased amounts until 2007, where we started selling in a corner of a shared room at Winemakers Loft.  In 2009, the facility was sold and new owners wanted to fill actual tasting rooms. So, we were up with a hard decision. Was it time to have an actual tasting room of our own?  Being a microscopic winery, it was either sink or swim and we decided to go for it.  Thirty-eight years after the vineyard was planted, 14 years after our first two barrels of wine made, and 10 years after having the tasting room opened, we are making over 2,000 cases of wine and selling 95% of that through that same door each year.”

  Martinez says the business tasks are now split among the family members.  While he serves as Head Winemaker, Sergio Martinez is Grape Grower, Kristy Martinez is in charge of Tasting Room/Hospitality and Monica Martinez is Business Manager.

  Two Mountain Winery is a fourth generation enterprise headed by brothers Matthew and Patrick Rawn.  Located in Yakima Valley near Zillah, the Rawn brothers oversee 228 acres of wine grapes on seven vineyard sites used not only for their own wine production but also for their winery grape clients.

  Patrick Rawn, who is General Manager and Head of Vineyard Operations, says that once the brothers returned to their family’s land, they focused their interest, passion and skillset(s) on producing grapes for making wine, transforming what was once a family-owned tree fruit farm into a successful vineyard and winery.  They planted the first vineyard in 2000.  “Our production facility and a couple of our vineyards are located on the farm our grandparents started in 1950, near where our grandfather grew up farming… it is very important to us we honor our history and their legacy. “

Four Important Ways to Use Software in a Winery

By: Alyssa L. Ochs

For hundreds of years, wineries got by with keeping track of their operations with little more than pen and paper. But in today’s competitive wine industry, getting by isn’t good enough, which is why an increasing number of wineries are relying on high-tech solutions that make running a wine business more productive and profitable. Fortunately, there are some excellent software companies that specialize in wine business software to address the common challenges that wineries face.

  With a focus on inventory, fulfillment, compliance, and wine club memberships, here’s how an investment in software can assist modern wineries.

Inventory Software

  Inventory management is a tedious job at a winery, which is why this type of software is in such high demand. Inventory software helps winery owners keep track of how many bottles of wine are available, understand the production history of the bottles, and ensure that each wine batch is traceable. This is a good type of software to invest in because it can ensure fewer counting errors and reduce the amount of time your staff has to spend manually keeping track of wine bottles that are produced, sold, and shipped.

  Fulfillment Software

  Order fulfillment can also be a challenge for wineries because it is a time-consuming and error-prone task. Fulfillment software winery can help winery staff create new orders, search past orders, view inventory details, facilitate returns, and be alerted about inventory shortages. Other fulfillment software features include the ability to view invoices, run reports, and get order status updates.

  It’s important to choose fulfilment software that integrates easily with the current information you are working with and that can provide detailed reports about supply chain issues.

Compliance Software

  Wineries must comply with many rules and regulations, which can be hard to keep track of and put you out of business if guidelines aren’t met. This is why compliance software is a popular choice among wineries to reduce business risks and keep up with important deadlines. Software companies offer solutions that help wineries follow the legal requirements of operating an alcohol-based business in a more accurate and precise way. This is particularly important when your winery begins to sell bottles to new markets outside your home region.

  However, this type of software can be unnecessarily expensive if you have a very low production volume, and you’ll still need a staff member to manage the compliance software system in-house or on an outsource basis.

Wine Club Software

  Wine clubs are great ways to retain loyal customers and stay connected with the wine-loving community. Good wine club software informs consumers how much they will save over time by becoming a member, makes it easy to buy bottles, and simplifies the process of running a wine club. With this type of investment, a winery can create shipments, print shipping labels, report on member statistics, customize shipments, and stay in touch with members more regularly.

Recommended Wine Software Companies

  The wine industry is big business for software companies, but it is a smart idea to choose a company that has specific applications for wineries rather than more general applications that are broad enough for any type of company.

  One company that specializes in the business side of wine is Microworks Technologies in Napa, California. Microworks provides direct consumer sales management software for the wine industry though tasting room, wine club, wine marketing, and winery accounting solutions.

  Scott Meloney, the president and CEO of Microworks Technologies, told The Grapevine Magazine that one thing that sets his company apart from others in the industry is that when you call Microworks, you will reach a real human being.

  “If you need technical support, we encourage you call us by phone, where you will speak to a live person and your question(s) will be answered to closure on the first call 99% of the time,” Meloney said. “Our staff is made up of industry veterans who understand the wineries business and will relate to your questions.”

  Meanwhile, VinNOW LLC is a winery software company that provides customer, wine club, and sales and inventory management all under one roof. This Mesa, Arizona-based company also offers free training and support, extensive reporting real-time wine club management, point of sale, and QuickBooks integration.

  Ted Starr, the CEO of VinNOW LLC, said that what sets his company apart is VinNOW’s extremely reliable customer service.

  “This ranges from customer support when the wineries need it, seven days a week, to the ability to support wineries who can’t rely on their internet connection.”

  Another company that provides a comprehensive software package that integrates numerous aspects of winemaking is The Winemaker’s Database. This Los Gatos, California company has been in the industry since 1983 and assists wineries with everything from tank transactions to barrel tracking, analytical data, customizable reports, 702 generation, and more.

  The Winemaker’s Database’s Vice President, Emily Vahl, told us how her company was originally created by a winemaker and how it still offers winery solutions from a winemaker’s perspective, rather than that of a company or programming team with no winemaking experience.

  “Also, our entire support team consists of former winemakers or winery employees that have worked hands-on with crafting wine,” Vahl added. “When our customers call WMDB, they speak with people who understand their specific needs.”

Considerations and Important Software for Wineries

  There are many considerations to take into account before investing in a new winery software system, and you may want to talk to other wineries in your region about what they use and what works well for them before making any decisions. Compare costs for similar types of software and think about whether you only need a single-service type of software or would benefit more from a comprehensive software program that addresses multiple needs.

  Other considerations include how customizable software is for your winery’s specific needs, the data setup process, and how you will transition from your current system to a new one. You might also think about the ability to use software through a mobile app, how easy to navigate the web interfaces are, and how secure the site is for cloud computing technology and data center privacy. Customer technical support for software purchases and access to future software updates as technology improves are also important considerations.

When asked about the most crucial products that are must-haves for a modern winery, Meloney of Microworks Technologies said, “At the very least, a winery will need a good CRM package with POS, club, ecommerce, inventory, and accounting software so it can leverage sales efficiently with the right tools to promote, track, and measure business goals.”

  Starr of VinNOW pointed out that crucial software needs vary with each winery because some only sell wine online, while others sell through retail, clubs, have tasting rooms, or incorporate a combination of these sales channels.

  But overall, for software or hardware, POS, club, cart, compliance, accounting, communications, and other products, Starr said that wineries “need products that work the way the winery wants to run their business, which are affordable and supported with great service and have the ability to grow with the business as the business grows and changes.”

Vahl of The Winemaker’s Database said that the most important type of software for a winery to have is anything that can help it reduce paperwork and be efficient and organized.

  “Winemaking is an art form, but it is also a craft, meaning the end product needs to be consistent each time,” Vahl said. “Software is an excellent tool because you can click a few buttons and gather the data instantly to view the numerous components of a blend.  Plus, since nobody enjoys paperwork, so it’s pretty handy to let your computer do the leg-work when it comes to providing the required reports to the government.”

How to Avoid Common Software Mistakes

  Meloney from Microworks Technologies said that many businesses make the mistake of not taking the time to learn the full capabilities of their software. This means that you might be missing out on important efficiencies that the software has to offer. Another common mistake he noted was inadequate hardware.

  “Can you image pulling a boat up a hill using a bicycle?” Meloney asked. “Recognizing the impact of outdated computer equipment on the performance and reliability of software can be the difference between success and failure of a software system.”

  To avoid future regrets, Starr of VinNOW emphasized the need for wineries to call multiple references with similar business demands and review the hidden costs and expenses of possible solutions.

  “Ask references about the surprises and difficulties they uncovered during the installation and first six months of using the solutions,” Starr advises. “Also, ask references about any shortcomings and strengths of features and service.”

  Vahl of The Winemaker’s Database said that a common mistake is looking for an entire software package from just one provider. For example, her company has specialized in wine production software for over 35 years and that is its primary area of expertise.

  “Often, wineries approach us looking for a software package from a single company that can do everything from vineyard management to POS,” Vahl explained. The areas of vineyard management, wine production, warehousing, accounting, point of sales, and wine club are vastly different from one another, which is why I am a fan of software interfaces. When companies work together to create interfaces, then they can offer some pretty amazing options to clients because they are each doing what they do best.”

Software Advice for Wineries

  Modern wineries rely on software for accuracy, efficiency, and to be competitive, but a software decision could either help or hurt your business. Therefore, it is advisable to talk to a few software companies to get a sense of how their products can work with your current operations.

  Meloney from Microworks Technologies advises wineries to know their business needs, be thorough, and check with as many references as possible before implementing new software for their operations. 

  “You don’t want to favor one department in the decision when it may cripple another,” Meloney said. “Make sure you are provided an in-depth demo of the features in detail. Know that what you see on the surface does not represent the software’s capabilities. Ask references about the vendor, not just the software, because the quality of your vendor is just as important as the software itself.”

  Starr of VinNOW’s main pieces of advice are to review your winery’s goals, assess the strengths and weaknesses of your team and location, and know what questions you need to ask software companies. He also recommends making sure a company has the features you need and to remained focused.

  “It is so easy to get distracted with features like customer photos in your POS and club, but since most of us don’t have facial recognition features, we end up finding out that a customer is a club member when we speak with them,” Starr said. “And every customer should get excellent customer service, so the feature sounds great but is not highly used.”

  “Then have a hands-on test-drive of the software,” Starr recommended. “If you plan to keep the solution for three to five years, dedicate a few hours per solution to truly see the depth of the solution and avoid picking the wrong solutions. Try adding a sale, changing the order mid-stream, cancelling an order, processing a club release, and managing returned packages and cancelled orders. Take the time to access reports that you need. Some solutions are strong in reporting but need a rocket scientist to use them. Ask how they meet ADA and PCI compliance and how they deal with D2C compliance and all the new tax reporting requirement and permits that are required.”

Finally, Vahl of The Winemaker’s Database advises wineries to start small and not try to resolve all of your issues right away because this is a common way that wineries end up paying too much for way more software than they really need.

  “I always recommend starting with the simplest form of the program and then adding on components as they are required, when users become accustomed to how the software works,” Vahl said. “Modular-based solutions are excellent for keeping costs down and also for helping wineries create a tailored solution for their operations.”

How Does Your Safety Program “Pair” With Your Workers?

With the intensity of the wine season gearing up and peak times just around the corner, how prepared are you to protect the health and safety of your workers? Protecting your employees is crucial to attaining your orchard and vineyard goals and having a successful operation. Having a solid and functioning safety plan in force results in better productivity, enables your workers to thrive and contribute to the performance of your business.  A good safety program is a win –win for everyone!

Regardless of the size of your operation, it is your responsibility as an employer, to have a safety program in place.  Depending on the size of your operation, your safety program may be informal or it may need to be more formal in nature – every winery is different. You’ll obviously want to abide by any government safety regulations that apply but there are also several safety management practices that will help you better demonstrate your commitment to safety, provide a safer working environment for your workers and yield you more efficiencies within your business.  It is not uncommon for a winery to produce a safety manual from an online template, issue it to their workers, briefly review it during a new employee training session and in turn, believe they have an effective safety program. Even though doing this is important, there are additional ways to visibly support your safety program to the point where it actually becomes “operationalized” into your day-to-day activities.  Outlined below you will find some of the ways we have found to be very effective to visibly demonstrate your support of your safety program.

Effective Ways to Promote a Safety Program at a Winery

Safety Policy and Program

  1. Draft a safety policy statement and sign it, better yet, have all of your supervisors sign it too.
  2. Make sure that your workers receive this policy statement either through an employee handbook, an employee bulletin board posting or through new employee orientations and meetings.
  3. Safety responsibilities should be formally assigned to a single individual to coordinate safety compliance efforts, accident investigation, and emergency procedures.
  4. Verify that appropriate safety responsibilities are also defined for everyone else.
  5. Work with either your insurance carrier or your insurance broker to establish an internal claims cost containment or return to work policy to reduce post-accident injury expenses.
  6. Hold supervisors accountable in annual performance reviews in part for safety objectives and/or the accident results of their workers.

Safety Rules and Standards

  1. Workers need to know how to safely do their job by having general work procedures and safety rules developed for your winery operation. High risk procedures like confined space entry, lockout / tagout, any work at heights, etc., need to be in writing.
  2. Safety rules are as important as any other part of your business. Write them so they are simple and easy to understand. Distribute them to all workers and have them sign an acknowledgment of understanding. Also post them in a common area as a reminder to everyone.
  3. Have a disciplinary system in place to deal with any safety rule violations.
  4. Develop a plan for winery emergencies like natural disasters and fires to make sure your workers know how to effectively respond in emergency situations.

Safety Training

  1. Make sure you have a safety orientation plan in place. Complete the orientation before workers begin a new job. Workers need hands on job training.
  2. Train your supervisory personnel so they can conduct safety inspections related to workplace safety hazards or applicable regulations in their area on a regular basis.
  3. Review your winery operations to determine the safety training needs for all work areas. This would include areas such as: emergency response to fire or injury, confined space, electrical safety, handling of chemicals, fall prevention and wearing of personal protective equipment, just to mention a few.
  4. Supervisory safety training sessions should be held regularly, addressing the following: accident investigation, conducting safety talks, understanding workers compensation, complying with government safety regulations, completing safety inspections, and controlling employee accident costs, as needed.

Safety Inspections

  1. Formal safety inspections should be conducted regularly by supervisors or other management staff. Document the results of these inspections.
  2. On a daily basis, supervisors should routinely conduct informal safety inspections with any negative findings documented and corrected.
  3. Consider developing customized safety inspection checklists for each area to ensure your inspections are thorough and consistent.
  4. Have a follow-up system in place to make sure that systematic corrective action is being taken on the deficiencies noted during safety inspections.
  5. Regularly update your safety inspection procedures and checklists by utilizing information generated in accident investigation reports so you can prevent recurring incidents.

Accident Investigation

  1. Have a supervisor (of the employee) investigate all injuries requiring medical treatment along with any “near misses” to make sure they don’t happen again.
  2. Maintain accident statistics about injuries that occur in your winery operation and review them regularly in management staff meetings. An accident occurring within your facility should be considered a significant winery operational deficiency and you should appropriately take corrective measures for each one.
  3. 3. Focus on fact finding, not fault finding to avoid attributing accident causes to employee carelessness or possible fraud on accident investigation reports. Identify the underlying root cause(s) for each accident.
  4. Have a first aid treatment procedure in place to help effectively reduce the severity of work-related injuries. You should include:
  5. a) A properly stocked first aid kit. The American Red Cross recommends: https://www.redcross.org/get-help/how-to-prepare-for-emergencies/anatomy-of-a-first-aid-kit.html
  6. b) Eye wash station(s). Grainger has an article describing where eye wash stations should be placed: https://www.grainger.com/content/qt-emergency-shower-eye-wash-stn-req-120
  7. c) Employees trained / certified in first aid. First aid training is often available through local organizations such as the Red Cross, local fire departments, EMS, etc. Check your local area listings.

Personal Protective Equipment (PPE)

  1. Conduct a hazard assessment of your winery operations to determine any personal protective needs and requirements for your workers. Make sure appropriate PPE is readily available to all workers, they are trained in its use and they follow all established requirements.
  2. Hold your supervisory personnel responsible for enforcing the use of PPE devices. This would include such items as safety glasses, proper footwear, gloves, and hearing protection, etc.
  3. On a periodic basis, review accident and inspection reports to evaluate the use or need for any additional personal protective equipment devices.


  1. Demonstrate safety is a priority at your winery by holding regular meetings with your workers and supervisors to talk about any safety concerns. Keep minutes of each of these meetings with what was talked about and who attended.
  2. Have an “alternative duty” transitional work program in place to encourage injured workers to remain on the job in restricted capacity.
  3. Consider having a constructive policy in place to address workers who have had two more injuries or property damage accidents during any twelve-month period of time.
  4. Establish ideas and plans to motivate all workers to follow existing safety policies/procedures in an effort to achieve specific safety goals through such methods as personal recognition, bonuses, awards, etc.

Mechanical Safeguards

  1. Survey any high accident areas, materials, processes or buildings annually if you are having occurrences to specifically evaluate the adequacy of your equipment safeguards and/or OSHA machinery guarding compliance.
  2. Identify and provide appropriate signage where guarding is required. Develop procedures when guards are required to be removed for service or maintenance.
  3. If protected by interlocks or safety switch, inspect these systems regularly to verify that they have not been disabled or bypassed.

General Operating Conditions

  1. Maintain good housekeeping practices in all of your working areas so as to reduce slip, trip and fall hazards.
  2. Prohibit the climbing on racks in any storage or warehousing operations. Provide and encourage the use of sound, sturdy ladders.
  3. If forklifts are used, provide required training to all operators. Order pickers, if used, must work from an approved platform and wear appropriate fall protection.
  4. Tractors, mowers and other power equipment should be provided with appropriate rollover protective devices (ROPS).

Vehicle Safety

  1. Motor vehicle records should be routinely obtained for all new drivers and updated annually.
  2. Motor vehicle records should be evaluated using a defined point system for all drivers on an annual basis.
  3. A record of training should be maintained on file for all personnel who have access to and operate vehicles, farm equipment, vans or other powered equipment during the course of their employment.
  4. Accident reporting kits should be kept in all vehicle glove compartments.
  5. Drivers should conduct vehicle inspections daily.


At the end of the day, safety doesn’t need to be complicated. You can keep your program simple so that it meets the needs of your winery. Remember that:

  • Safety doesn’t happen without the person in charge and everyone else standing up and taking responsibility.
  • No one single person can be responsible for safety – more people making safety a priority correlated to fewer people being injured.
  • Stay with it – safety isn’t about written rules and handbooks, it’s about thinking about the potential dangers and what needs to be done to keep everyone safe.

By “pairing” these safety program components with what you and your workers do, you’ll be better prepared to meet the busy times ahead with safer and fewer injured employees. You, your employees and your business will all benefit!

  The information provided in this article is intended for general informational purposes only and should not be considered as all encompassing, or suitable for all situations, conditions, and environments.  Please contact us or your insurance professional if you have any questions. Products and services are offered through Markel Specialty, a business division of Markel Service Incorporated (national producer number 27585).  Policies are written by one or more Markel insurance companies. Terms and conditions for rate and coverage may vary.

For More Information Please Call Us At:


Or Visit Our Website:


Is Your Facility Ready to Host Events?

By: Markel Insurance

As the spring season brings new life to the vineyards and offers opportunities of growth, so too are winery owners looking for new growth in their operations with increased sales.  Having a great experience at a winery results in improved customer loyalty, increased publicity and more sales.

One way to maximize your public exposure is by hosting events.   The activities can be small and simple such as an acoustic guitar on the back patio or larger concert exposures.   Events can include wine club dinners, fund raisers, vendor shows or weddings.

In planning for the events that will best suit your operations and facility, several key elements should be reviewed to help minimize losses and protect your assets.  Understanding your target market and what activities are best for you are as unique as each blend of wine.  Current markets have several popular events, including yoga stretch and sip; Wine Paint and Pour; Races through the vineyard or even a vendors “farmers market” offering local crafts and products.

There are the tried and true, more traditional activities expected at a winery with Crush or Harvest festivals, pickin’ party, club dinners and weddings/shower events.

You should consider the space needed based on the anticipated number of participants and any specialty needs, including tables & chairs or tents, rental equipment, caterer or DJ/vendors.

Once you have an idea on the type of event that will appeal to your demographics, a quick checklist can be reviewed.

Facilities Checklist for Hosting Events:

  • Is the use/occupancy rating for the property acceptable for the type of event?
  • Will you be able to provide adequate staffing for supervision?
  • Is there clear signage for acceptable vs restricted access areas?
  • Are there any ADA compliant concerns at the facility?
  • Based on the attendance expectations, will there be enough bathrooms, trash cans, water stations, shade/covered areas?
  • Are the electrical demands up to code? Who manages the setup and takedown for stage and dance floor exposures?
  • Is there emergency personnel on site?

Slip, Trips and Falls

Liability losses related to the facility most commonly relate to the slip, trip or fall category.  Not to underestimate the severity of what seems to be a simple loss cause, the following claim shows a good illustration of what can happen.

  Real-life claim example: A small concert event on a patio that required additional electrical power and resulted in cords running along the open patio.  A trip and fall occurred resulting in a fractured hip.  A surgery turned into an infection, causing a second surgery and extended recovery time.  With lost wages alone, the price was rising, and when finally settled to include medical, the shared cost was nearly $1.7 million.


Parking can be an often overlooked, but it is an important influence on the experience of the customer because it can be the first and last impression for any event.

Parking Factors to Consider

  • Is there adequate parking based on the number of attendees and is it easily accessible?
  • Always consider the path for emergency vehicle access (fire trucks, police cars, and ambulances).
  • Should local authorities be notified of the event and to help route the traffic flow in and out of facility.
  • Make sure the parking lot is clear of debris and free of obstacles with clear walking areas outside of traffic pattern.
  • Verify all areas of the parking log are well-lit for evening use and not susceptible to rain or vehicle being stuck.
  • Have clearly marked flow patterns and parking lanes help eliminate confusion and frustration.
  • Determine if you will have attendees directing traffic, or will be offering valet parking or any shuttle/transportation.

  Real-life claim example: Parking mishaps may leave you exhausted, or exhaust-less.  A vineyard/winery cleared a small lot to have as overflow parking for their outdoor event.  A small tree stump remained and although not a concern for the tractor or owners pickup truck, was not concealed enough to avoid damaging the exhaust systems of several customers that parked in the field lot.


Depending on the size of the event, the responsibilities of the host grows with increased attendance.  When managing crowd control, do you rely on winery staff or opt for hired security.  Are there any weapons carried by other than law enforcement?  Do you hire off duty local law enforcement or an independent contractor.  Rules and procedure should  be clear relating to checking coolers and bags; not allowing any outside liquor; and restricted areas, especially where there is an attractive hazard, i.e. – open barns, fire pit, swimming pool/fountain/pond.  As an aside on fire, any open flame, fire pits, bon fires, outdoor grills, burgers and s’more’s cooker should be reviewed to make sure there are proper barriers, clear space and storage of combustibles.

Contracts and Certificates

Contracts and certificates should be in place for all vendors, caterers, artist, or instructors.  Each certificate of insurance should be from an  A rated or higher admitted carrier with limits equal to or greater than your limits, naming you as an additional insured, owner of premises.


People love their pets and pet lovers typically believe that everyone else should also be a pet lover, especially their pet.  From an insurance standpoint, it is not recommended to have pet friendly events.   If pets are allowed is there restrictions to be on leash or in designated areas.

Is the vineyard dog allowed to mingle in the crowd, “unsupervised?”

Know the difference between a professional service animal and a therapy pet and have clear rules so that you avoid an issue of selected acceptance or exclusion and can rely on your policy language.


Although minors may not be the norm for the tasting room, family friendly events can bring in a broad age range.   Have you crawled through your facility lately?  What may be obvious to an educated adult, may not be as clear to a child.  Locks and barriers are better than signs alone.  Have staff training to look for hazards and anticipate a lack of parental supervision.  Most wineries are not suitable as a daycare operation and should not have any childcare exposures.

Miscellaneous Exposures

  Evening Events: As a general rule of thumb, liability goes up when the sun goes down.  For many reasons, whether it be the time element of consuming more alcohol or just the visual difficulties to recognize hazards, losses are more likely as events run into the evening hours.   Having events that are shut down by 10:00pm would be considered a good practice and depending on your coverage carrier, may be a requirement.

  Cyber Security: Cyber / data breach coverage can include storing the credit card information for your club members, but can also apply to online purchases and any ticket sales for events.

  Private Events: When dealing with a special private event such as a Wedding or private party, clear contracts are the key.  The greatest frustrations come for unmet expectations.  Make sure all parties know what is being provided and what the expectations are for contracts, payment, timeframes or services.

  Real-life Claim Example: A facility that was not closed to the general public during a wedding event.  There was no clear detail on a separation of the wedding party areas vs the public access tasting room area.  In a clash of Party vs Public, tempers rose, words were cast and a white wedding dress is now a shade of cabernet.


This checklist is not all inclusive for all the unique elements to all event types.   The checklist should be a starting point for your facility.  Before hosting more events at your facility, review what type of events will be the best fit for your situation to provide a great experience for your guest.  Try to create events that will have a positive marketing buzz and will also increase your income while minimizing your exposures to loss.

The information provided in this article is intended for general informational purposes only and should not be considered as all encompassing, or suitable for all situations, conditions, and environments.

  Please contact us or your insurance professional if you have any questions. Products and services are offered through Markel Specialty, a business division of Markel Service Incorporated (national producer number 27585).  Policies are written by one or more Markel insurance companies. Terms and conditions for rate and coverage may vary.

For More Information Please Call Us At…800-814-6773, or Visit Our Website: markelinsurance.com/winery

Distributor Agreements: ‘Til Death Do Us Part?

By Brian D. Kaider, Esq.

Many early stage wineries market their products via tasting room sales, wine clubs, direct-to-consumer shipments and, to the extent permitted, self-distribution to local restaurants, grocery stores, and wine stores. Eventually, winery growth will necessitate working with a distributor, a relationship not to be entered into lightly. A distributor becomes an ambassador for the winery’s brand and, once retained, the supplier may have little control over how its wine is marketed. Further, these relationships can be difficult or financially impossible to break once established.

Supplier/distributor relationships are governed by franchise laws in many states. In the absence of franchise laws, the relationship is defined entirely by a distribution agreement between the parties. But, even in franchise states, the distribution agreement can play a critical role, particularly in the termination of the distributor relationship.

Too often, however, wineries accept a distributor’s “standard” agreement and when the relationship sours, the supplier finds that they are stuck with no viable option to terminate. The best practice is to engage an experienced attorney to negotiate the terms of the distribution agreement. While even the best attorney cannot evade state franchise laws (which generally prohibit a distributor from waiving its rights), there are ways an attorney may help bring balance to the supplier/distributor relationship. Some of the key terms to negotiate include termination, territory, brand scope, and exclusivity.


The most critical section of the agreement sets forth the manner and circumstances under which a supplier may terminate the distributor. In a franchise state, the law typically says that a supplier may terminate for “good cause.” If good cause is defined in the law, it is paramount that the distribution agreement mirror the language of the law, because in many cases, a contract that contradicts the law will be held invalid, leaving the supplier in the position of effectively not having an agreement at all.

For example, the Virginia Wine Franchise Act states that good cause includes “failure by the wholesaler to substantially comply, without reasonable cause or justification, with any reasonable and material requirement imposed upon him in writing by the winery.” Further, the Act provides, “good cause shall not be construed to exist without a finding of a material deficiency for which the wholesaler is responsible.” Tracking that language, a distribution agreement in Virginia should clearly define the distributor’s obligations, such as meeting certain performance goals, as “material requirements” and explicitly define certain actions, such as mishandling of the product, as “material deficiencies.”

When the law does not define good cause, and in non-franchise states, it is essential for the distribution agreement to do so. The contract should clearly set forth the distributor’s requirements that are critical to the business relationship and for which failure to perform will be grounds for termination. Examples of common requirements include: meeting specified sales and marketing goals, maintaining appropriate records and reports regarding inventory and sales, transporting and storing the product under specified temperature and lighting conditions, exercising adequate quality control measures to ensure product freshness, and paying invoices within a specified time frame. It is also common to include termination rights if the distributor is declared bankrupt, enters a voluntary petition for bankruptcy, enters into a compromise or agreement for the benefit of its creditors, or fails to maintain in good standing all Federal and State licenses and permits necessary for the proper conduct of its business.

In some cases, sale of the distributor or even a change in the ownership structure may be justification for termination. For example, if an acquiring distributor has a much larger portfolio, especially if some brands are direct competitors, the supplier may have grounds to object to the acquisition. While not always allowing a supplier to terminate the distributor, this period during which a supplier may object can provide an opportunity to negotiate with the new distributor to sign a more favorable agreement.

In some franchise states, a supplier must compensate the distributor for the lost business even if the supplier is able to terminate for cause. Sometimes the law simply says the supplier must pay the distributor the “fair market value” of the distribution rights. There can be an expensive battle just to determine that compensation if fair market value is not defined in the distribution agreement. Often, the value is defined as a percentage of the prior year’s case volume multiplied by some dollar amount per case. The “standard” contracts pushed by some distributors can be very severe in this section. In the beer industry, it is not uncommon to see values set at an entire year’s worth of profits times a multiplier that can range from 1.5 to many times higher. In practice, often a new distributor will buy out the distribution rights from the old distributor, but if the supplier wants to return to self-distribution, this buy-out provision may be cost prohibitive.


Depending on the size, experience, and reach of the distributor, there may be an opportunity to creatively carve out different territories. Territories are most commonly limited to certain states. However, a supplier may be able to limit a smaller distributor to certain counties or even specific types of establishments (grocery stores, but not restaurants, for example). One of the clearest breaches of the distribution agreement, that may constitute good cause for termination, is for a distributor to make sales outside of its contracted territory.

The growth of direct-to-consumer (DtC) sales is one of the biggest threats to the distributor’s business model in the wine industry. According to the 2017 Direct to Consumer Wine Shipping Report (www.dtcreport.com), the 2016 volume of direct-to-consumer wine shipments increased by 17.1% to 5.02 million cases. To mitigate this risk, it is becoming increasingly common for distributors to seek limitations on such sales within their territories in the distribution agreement. Since small wineries make up the fastest-growing segment of these DtC sales, they should carefully evaluate the business case for this type of restriction.


Generally, when a distributor is hired to carry a winery’s brand, it has the right to all of the products in that brand. But exactly what constitutes a “brand” is unclear both in the statutory language of most state franchise laws and in many distribution agreements. For example, Boordy Vineyards, the first commercial winery in the State of Maryland, sells three “series” of wines, a Landmark series, a Chesapeake Icons series, and a Sweetland Cellars series. The labels on the first two series includes the Boordy Vineyards logo (the name in gold lettering in a black rectangle), but the Sweetland Cellars wines do not (see below). In fact, the only indication that the Sweetland Cellars wines are made by Boordy is a statement to that effect in small print on the back label.

The question is whether the Boordy wines are all a single brand, two brands (one that includes the Landmark and Chesapeake Icons series, since they both carry the Boordy logo and the other being the Sweetland Cellars series, which does not), or three separate brands. Since Maryland does not have a franchise law with respect to wines, the parties are essentially free to define the brands as they wish in their distribution agreement. Failing to make an explicit definition can leave open to interpretation whether the agreement covers the winery’s entire repertoire of products or only a subset. That vagueness can be costly if a dispute arises between a winery and distributor. For what it’s worth, all of Boordy’s wines are managed by a single distributor, though it does hold back a few of the Landmark series wines for sale exclusively through the winery.

Maryland does, however, have a beer franchise law and while “brand” is not explicitly defined, the law appears to favor the distributor in terms of brand scope. Specifically, section 105 of Maryland’s Beer Franchise Fair Dealing Act prohibits a brewery from entering into a beer franchise agreement with more than one distributor for “its brand or brands of beer” in a given territory. One might argue that the language “or brands” means that the first distributor has the right to all brands of the manufacturer in a given territory. In fact, that very issue was litigated in the 1985 case of Erwin and Shafer, Inc. v. Pabst Brewing Co., Inc. and Judge Couch, writing for the panel of The Court of Appeal of Maryland, disagreed. The court held that if a brewery retained a distributor to handle one or more of its brands within a territory, it could not then contract with a second distributor within the territory for those same brands. It could, however, contract with a second distributor to carry a different set of brands.

How far the court would take its interpretation of what is a “brand” is unclear, however. In the Pabst case, the first distributor was given the right to distribute Pabst brand beers, but Pabst later merged with Olympia Brewing Company and gave the second distributor the right to sell its newly acquired Hamm’s brand beers. Whether the court would have allowed the brewery to contract with one distributor for Pabst and another for Pabst Extra Light it did not say.


Even if rights under a distribution agreement cannot be divided by brand (as in the case of the beer franchise law in Maryland), some states may nevertheless allow a supplier to contract with more than one distributor within a territory. If permitted in their state, a winery should ideally enter into all of its distribution agreements for a given territory simultaneously, providing notice to each distributor. At a minimum, the winery should ensure that the first agreement entered into is explicitly designated as non-exclusive. Otherwise, the distributor may view the agreement as giving it exclusive rights to the territory and could sue the winery for diminishing the distributor’s business if it were to engage a second distributor in that territory.

Final Thoughts

Whether a winery is in a franchise state or not, it is critical that it review and negotiate its distribution agreements carefully, with the assistance of an experienced attorney. It is also important to remember that the supplier’s diligence does not end when the agreement is signed. No matter how well the terms of the distribution agreement are negotiated and drafted, they are effectively useless if the supplier cannot back up its claims for good cause. Accordingly, thorough documentation is essential. If a distributor is not meeting sales goals, mishandling product, or failing to provide adequate reports, they must be given written notice of those deficiencies each time they occur.

There are great distributors out there who become essential partners in a winery’s business. But, sometimes those relationships can turn sour and signing an agreement without anticipating complications down the line can make it virtually impossible to sever those ties. A little forethought and planning and a lot of diligence will go a long way toward a successful termination of a bad relationship.

Brian Kaider is a principal of KaiderLaw, an intellectual property law firm with extensive experience in the craft beverage industry. He has represented clients from the smallest of start-up breweries to Fortune 500 corporations in the navigation of regulatory requirements, drafting and negotiating contracts, prosecuting trademark and patent applications, and complex commercial litigation.

(240) 308-8032

The Most Common Types of Financing Available on the Market for your Business

By Angela Faringhy, Innovative Lease Services, Inc

Metal tanks in a row inside the winery factory

Let’s talk about money. In order for your agricultural and wine business to grow – sufficient funds are needed to take on projects, making purchases and expanding your operations to become more efficient and in turn make more money. It sounds so simple, right?

Business owners, both small and large, often go to banks for financial assistance. While banks are one avenue for support, they are not the only establishment. I am here to share with you the most common types of financing you’ll come across and whom you can get them from.
As commercial financing experts working in the industry for over 30 years, we would like to share with you the most common and beneficial financing programs out there on the market for small to medium sized businesses. From cold cash to needing to purchase equipment to restocking inventory and supplies – discover which financing product closely matches your business’s needs.

Equipment Financing and Leasing
– How to get New Equipment

When the situation arises where your business needs to purchase equipment, you don’t have to pay cash to buy it outright, you can finance it. Tractors, stainless steel tanks, destemmers, computer systems and items like table and chairs are all examples of equipment that doesn’t need to be updated frequently and therefore can easily be financed, under the product name, Equipment Financing.

The entity supplying the funding (also known as a Lender) basically purchases the equipment from the supplier and rents the equipment back to the Lessee (your business) for a low monthly fee. At the end of the lease the Lessee has the option to purchase the equipment for as little as $1 or start a new lease for the latest and greatest equipment models. Leases range from 12-72 month terms and can include seasonal payment provisions to help match the cash flows of your business.

By leasing your equipment you also preserve your cash and pay for the equipment over the life of its use. Example a new high producing destemmer costs $40,000 or three new oak casks will come in close to $55,000. It’s hard to fork over the dough when your business is tight on funds. With Equipment Financing you can invest your saved money into other facets of the business or keep safe for future endeavors.

Where to get Equipment Financing: Shop Private Lenders or local credit unions for best programs.

Working Capital Loans
– How to get Cold Cash

Loans are one of the most common forms of business financing. The Working Capital Loan is designed as a short-term solution for those businesses in need of money to help run operations on any scale.

Whether you need to meet routine expenses or pay for new business endeavors, the Business loan is essentially a cash infusion into your bank account that can be used for literally any business expense.

Most commonly working capital is used for growth, debt and inventory (just one or a mix of all 3).

Growth – Utilize capital to expand operations, create a new product line or launch a marketing campaign to drive more sales.

Debt – Use funds to pay delinquent taxes or pre-pay taxes, cover payroll needs, or pay off any other form of high interest debt the business has collected.

Inventory – Stock up on goods that contribute to your bottom line such as; brand new bottles, yeast, boxes, oak barrels, supplies, wine club swag etc.

Where to get a business loan: Lenders, banks and the SBA (application process to qualify).

Invoice Factoring
– Also Known as the Cash Advance

Having seasonal cash flow fluctuations can be a major issue when trying to grow a business. What I mean by this is if a business invoices a customer and in turn gets paid weeks after services are rendered or goods are shipped, there is a lack of consistent cash flow or immediate exchange of money for services. That business will still have to pay up front for supplies and labor, but the valuable cash flow is tied up in invoices leaving the bank account empty. One effective way to solve the cash flow crunch is with Invoice Factoring.

Invoice factoring is simple in how it works:

1. You sell your invoices to a factoring finance provider (like ILS).

2. Factoring provider advances you up to 95% of the invoice amount in 24 hours or as quick as same day.

3. Factoring provider collects full invoice amount from your customer(s).

4. Once your customer pays the factoring company (1 week- 6 months etc.) You get the remaining balance (minus a small factoring fee).

Many companies that often invoice other businesses have found invoice factoring to be an effective and consistent financial strategy for their business – keep reading to learn why.

Unexpected Expenses

Just about every business faces the surprise and stress of an unexpected cost and there isn’t enough cash on hand to manage. Invoice Factoring allows a business to quickly cover those unexpected costs.

Extension of Billing Department

It is common for back offices to struggle with keeping up on billing and collecting from customers. Or if your accounting department isn’t effective in making sure payments are received on time. Many Invoice Factoring partners act as an extension of your billing department so you can eliminate a headache of chasing down payments and focus on other things.

Essentially a cash advance, it’s your money you are just getting it faster!

Where to get Invoice Factoring: Specific Lenders whom offer Invoice Factoring Programs

You may be wondering what about investors, angel funds, cash advances, lines of credit, etc. We have not listed those as we find our customers often come to us in distress after taking on this type of obligation. There are many setbacks with giving away a portion or selling your soul to investors. Also, opening up to many business lines of credit (credit cards), can be a very dark hole to try and climb out of.

Equipment Financing, Working Capital Loans, and Invoice Factoring all have some commonalities and that is they each save your business thousands in capital, apply and receive funding as quick as same week, and most importantly save you from some serious financial mishaps that you may not be able to recover from.

Given that every business is unique, make sure to first consider all of your needs and options. We are a commercial lender and provide custom Equipment Financing Programs, Working Capital Loans and Invoice Factoring Programs. We are available for a free consultation to help you discover what financing product fits your business needs.

For more information visit
Innovative Lease Services, Inc.
online at www.ilslease.com

The Real Benefits of Financing: What are My Options?

By Angela Faringhy, Innovative Lease Services, Inc.

Financing Versus Equity Financing

Banks, Lenders, and Investors (oh my!) all exist because we fellow businesses need them. They sometimes can be the fine line between succeeding and closing the doors for good. Each of these entities, holders of large sums of money, provide capital.

In order to build new wineries, buy new equipment, develop new products, and upgrade information technology, businesses have to have money.

Banks, Lenders and Investors each have different financial structures and costs associated with using their money – also known as their “cost of doing business”. The beginning of the year is a popular time for companies to seek out financing assistance due to restructuring or restrategizing operations. No matter the goal, preparation and knowledge is the key to success.

Money Comes with a Price

Money is what we use to buy goods and services. There are many forms of monies in the world but here in the US we use the US Dollar. Not every dollar is treated equal. As a matter of fact every dollar, depending on where it comes from has its own price tag.

The cost of capital refers to your cost of making a specific investment and what you make in return. The basic formula for Cost of Capital is:

the amount of money (cost) and capital (cash) or
another infusion of equity into your business =
your businesses expenses and how much
you pay for it

Generally, business owners will not invest in new projects unless the return on the capital investment is greater than the cost of the capital. The cost of capital is key to all business decisions.

Continue to read up on the two most common ways a business can acquire money; Financing versus Equity Financing.

Equity Financing

Equity in business is the portion of the company’s assets that belong to the owners or stockholders. If a company uses funds provided by investors, then the cost of capital is known as the cost of equity.

Investors, angel funds, venture capitalists etc., all fall under the equity financing umbrella. In summary a business gives up a piece of their company’s equity to purchase cash to expand business and operations, essentially giving up a portion of ownership stake. These investors don’t actively participate in the daily management of the company, but they are active in strategic planning in order to reduce risks and maximize profits.

A popular example is the hit television series Shark Tank. Startup and established businesses alike come on the show seeking financial help, and are willing to negotiate a percentage stake of their business for a monetary investment from the “Sharks.” This is actually the most expensive form of financing. Here is an example why.

Let’s use John’s Packaging, a startup product packaging business. John needs about $100,000 for additional equipment and expenses to really get his business going. John finds an investor willing to provide the $100,000 in return for 20% stake in the company. Let’s fast forward five years, and John’s Packaging is a success valued at $5 million dollars. The 20% stake has grown to a value of 1 million dollars. That is a 1000% return on investment, great for the investor, not so great for John. In conclusion, John received all of the money he needed initially but later down the road realized the true value of what he had given up early on in the game.

Equity Financing is a top choice for a startup who is not necessarily pulling in monthly income quite yet and needs financial assistance to get operations up and running.


Referring to the cost of capital, Financing is known as cost of debt in the financing world. The word debt gets a bad rap, but it really shouldn’t always be considered a negative. Debt is when the borrower is required to repay the balance by a certain date. Good debt is an investment that will grow in value and generate long term income.

Equipment Financing and Leasing, Working Capital Loans, Cash Advances, and Invoice Factoring are the main products under the financing umbrella.

Financing is provided by lenders and banks. The cost of debt is the interest rate paid by the company on the financing amount. Interest rates are determined by a combination of elements; the current state of the market, how long a business has been operating, risk factors, credit scores, bank history and amount needed. An advantage is the fact that interest rate expenses are tax deductible and therefore more tax-efficient than equity financing. This form of financing is also able to provide services to a broader range of businesses across all industries with a variety of financial histories.

Financing differs from equity financing in that a business may acquire capital without giving away any portion of the business and essentially is utilizing a line of credit. Financing programs are structured to have fixed monthly payments over a 2 or 5 year horizon. You always know going in what your cost is going to be.

John’s Packaging, an 8 year old company needs capital to pay for replacement equipment costing $100,000. John qualifies for an Equipment Financing Program from a Private Lender, whom will provide all $100,000. In return John makes monthly payments for 24 months (also known as the terms) until the $100,000 is paid off. At the end of the term John owns the equipment and still owns 100% of his business.

Financing is a top choice for businesses who are in operation and can make the monthly payments.

In Summary

Partnering up with an investor is expensive, however investors can also provide invaluable industry expertise that may not be available from other resources.

Financing on the other hand is a shorter term investment to help boost business without restructuring or including more hands in the profit share.

The take away is for each and every business to spend time evaluating its true needs, and the potential cost of bringing an investor into the mix or taking out a line of credit.

Innovative Lease Services is a commercial lender and provider of custom Financing Programs.
Visit www.ilslease.com
or call 800-438-1470
for more information.

Adding a Financing Arm to Your B2B Business “aka” In-House Customer Payment Plans

By Angela Faringhy, Innovative Lease Services, Inc

With majority of business processes automated – payment plans are more readily available than ever before. This includes business goods, services, and consumer goods – almost everything under the sun can be financed.  With that being said it is crucial for a business to offer payment plans for products and services to keep up with competition and most importantly grow sales and increase revenue.  Commonly, a customer that wants or requires a finance option is often not going to share that with whom they are purchasing from. Keep in mind, 100% of your customers that pay cash are already doing so. So suppliers offering a financing option have the chance to convert more existing prospects into buyers.  As a private lender in the B2B space, read more to discover why one of the biggest mistakes a supplier or wholesaler of equipment can make is not providing alternative payment solutions to customers.

Customers will go to Competitors

When a business is greatly in need of business equipment and does not have the funds for it, they will always opt for an affordable option or a supplier whom offers payment plans.

A simple example: a winery’s 7 year old sprayer has given its last spray. The winery simply cannot afford not to get another sprayer immediately. Bugs, fertilizer, amongst other factors contribute to a ruined crop in a very short amount of time. And with no flexible budget to purchase a top of the line brand new machine outright – the winery will seek a supplier who provides some sort of payment plan because they cannot take the hit of such a financial burden at once, so unexpectedly. Next, the winery finds a supplier who lets them make small monthly payments for 24 months. This particular supplier whom offers payment options reaps the benefits of both worlds, selling to those businesses who cannot pay in full and those who can!

Customers Will Buy Less, When They Could Buy More

A grape grower is shopping for a new ripper in order to replant a diseased section for upcoming seasons. The grower is a repeat customer of S.C. Agriculture Equipment & Services, and wants to buy the same model ripper previously purchased. They have the money and are ready to pay in full. However S.C.’s Equipment offers financing now for all equipment and takes the opportunity to tell the grape grower about their new line of premium rippers. The premium line has new technology for better more efficient soil results. These rippers start at $5,000 more than the growers past model. However with payment plan options the grower can now afford one of the premium rippers! They decide to finance in order to upgrade to the higher end ripper. S.C. Agriculture Equipment & Services increased profits on an already secured customer.

Making all equipment affordable by different means of payment arrangements makes room for upselling and in turn more profit!

Common Concerns

Most commonly a business supplier of equipment will not have the financial resources to provide products upfront without being properly reimbursed at the time of transaction. Or typically the business does not want to take the risk of providing payment plans, which can have complications including; customers defaulting on their payments which leads to having to chase down the customer to get the equipment back, or taking further legal action. Thank goodness for collections!

Commercial Lenders and Equipment Leasing

This is where 3rd party Commercial Lenders come into play. A Commercial Lender is a financial institution which provides Financing programs that help support and increase the sales of their Vendor partners. These plans are commonly known as Vendor Financing, In-house Financing, White Label Financing, etc. Here, the lender acts as the de-facto financial arm for the Vendor and provides financing to its customers.

This becomes a real win-win-win for all three parties involved in the transaction. The Vendor gets to make the sale, the Lender gets to gain a new customer, and the end-user gets the equipment they need at the monthly payment that fits their budget.

Customers will experience significant benefits when financing with an independent lender, including speed of approval, limited or no financial information required, and the ability to structure custom payments and terms. For companies that have less-than-perfect credit, an independent lender is often the best solution as the credit windows are often significantly larger. What does this mean for the equipment supplier? Fast transactions and happy customers!

The typical Vendor Financing Program utilizes an Equipment Lease. The entity supplying the funding (also known as a Lender) basically purchases the equipment from the supplier and rents the equipment back to the Lessee (customer) for a low monthly fee. The lease can include cost of equipment, tax, shipping, installation and training. At the end of the lease the Lessee has the option to purchase the equipment for as little as $1 or start a new lease for the latest and greatest equipment models. Leases range from 12-72 month terms and can include seasonal payment provisions to help match the cash flows of the business.

For a customer that wants to own the equipment, most Independent Lenders will provide an Equipment Finance Agreement (EFA) whereby the customer is the owner of the equipment at the onset and the Lender is a Secured Party.

Wait…What About Banks?

Keep in mind, most bank loans will come with a requirement for a significant down payment, often as high as 10-20% of the equipment cost. And, bank loans usually only cover the equipment itself and do not include the installation, shipping, tax, and other “soft costs.” Timing is another factor that can greatly slow the process down. Banks can take weeks to decide on a loan approval for customers. Most importantly, a Bank does not lock in the specific Vendor into the transaction the way and Independent can, meaning your customer can take that approval to your competitor. ILS does not recommend sending customers to banks to get financing for business purchases.

Finding a Financing Partner

With many commercial lenders providing vendor programs, it is important to do the homework and research a partner whom can make the process as simple, seamless and speedy as possible. Most importantly seek out a partner that protects your sale throughout the process and does not charge you anything to be a partner – at ILS we call this “a no strings attached partnership.”

At ILS we have found that Vendors who did not previously offer a financing option can increase their prospect conversion rate by over 10%. Remember, most prospects are already sold on your equipment solution but unless they are a cash buyer they may not have the resources. By controlling the financing, you further control your sales.

About the Author:

 Innovative Lease Services, Inc. (ILS) is a private lender specializing in Vendor Financing Programs specifically in the agriculture, winery, brewing, and distilling industries. For more information or to enroll in the Vendor Program please call: 800-438-1470 or visit www.ilslease.com/equipment-lease/offer-financing.