(1) The department shall review the commission percentage discount rate received by agents that have operated under a continuous franchise agreement for at least three years pursuant to the requirements of 16-2-101, MCA.

(2) Section 16-2-101, MCA, establishes the date to determine the commission percentage discount rates. The original commission percentage discount rate was established on July 1, 1998, and either party may request a review every three years thereafter. The department may adjust the agent's commission percentage discount rate received during the remaining term of the agency franchise agreement, or at the next time the commission percentage discount rate is reviewed, to a commission percentage discount rate that is equal to the average commission percentage discount rate received by agents with similar sales volumes, if the agent's commission percentage discount rate is less than the average.

(3) Except as otherwise provided, sales information from the two most recent calendar years based on invoice dates will be used when determining the sales volumes.

(4) An agent's sales volumes can be distorted by closure of a business other than for holidays, weekends, inventory, or other temporary closures which occur in the ordinary course of business. This distortion could potentially result in the agent being placed in a sales band which does not accurately reflect their sales volumes. Such misplacement of an agent within a sales band would also affect the average commission percentage discount rate determination within the band.

(5) The department may, if sufficient data exists, project an agent's sales volume from a period of less than the two most recent calendar years as a representation of the agent's two-year sales volumes.

(6) Similar sales volumes will be established by using bands of seven agency liquor stores when available. Each agency liquor store will be placed in its own band with the next three agency liquor stores with greater sales volumes and the next three agency liquor stores with lesser sales volumes. When less than seven agency liquor stores are available, the following will apply:

(a) The agency liquor store with the highest sales volume will be placed in a band with the next three agency liquor stores with lesser sales volumes. The agency liquor store with the second highest sales volume will be placed in a band with the one agency liquor store with greater sales volume and the next three agency liquor stores with lesser sales volumes. The agency liquor store with the third highest sales volume will be placed in a band with the two agency liquor stores with greater sales volumes and the next three agency liquor stores with lesser sales volumes.

(b) The agency liquor store with the lowest sales volume will be placed in a band with the next three agency liquor stores with greater sales volumes. The agency liquor store with the second lowest sales volume will be placed in a band with the one agency liquor store with lesser sales volume and the next three agency liquor stores with greater sales volumes. The agency liquor store with the third lowest sales volume will be placed in a band with the two agency liquor stores with lesser sales volumes and the next three agency liquor stores with greater sales volumes.

(7) The average commission percentage discount rate for each band will be established by adding the band's agency liquor stores' commission percentage discount rates together and dividing by the number of agency liquor stores in the band. Each agency liquor store's current commission percentage discount rate will be used in the calculation unless the agency liquor store's current commission percentage discount rate reflects an adjustment through ARM 42.11.309 in any previous review period. In that circumstance, and for the purpose of calculating the band average only, the commission percentage used will be the greater of the agency liquor store's band average from the last review period or the agency liquor store's current commission percentage discount rate less the adjustment given through ARM 42.11.309.

(a) Example 1: An agency liquor store has a current commission percentage discount rate of 9.75 percent and it does not reflect an adjustment through ARM 42.11.309 in any previous review period. The rate used for the banding calculation will be 9.75 percent. The band's average for the current review period is calculated to be 9.35 percent. In this example, this agency liquor store's commission percentage discount rate going forward will continue to be 9.75 percent because it is higher than the band average.

(b) Example 2: An agency liquor store has a current commission percentage discount rate of 9.75 percent and it does reflect a .05 percent adjustment through ARM 42.11.309 in a previous review period. This agency liquor store's band average from the last review period is 9.25 percent. The rate used for the banding calculation will be the greater of the agency liquor store's current commission percentage discount rate less their adjustment through ARM 42.11.309 or the agency liquor store's band average from the last review period. In this example, 9.70 percent will be used for banding calculation purposes. The band's average for the current review period is calculated to be 9.35 percent. In this example, this agency liquor store's commission percentage discount rate going forward will continue to be 9.75 percent, because it is higher than the band average.

(c) Example 3: An agency liquor store has a current commission percentage discount rate of 9.75 percent and it does reflect a .05 percent adjustment through ARM 42.11.309 in a previous review period. This agency liquor store's band average from the last review period is 9.25 percent. The rate used for the banding calculation will be the greater of the agency liquor store's current commission percentage discount rate less their adjustment through ARM 42.11.309 or the agency liquor store's band average from the last review period. The agency liquor store's rate used to calculate the band's average will be 9.70 percent. The band's average for the current review period is calculated to be 9.80 percent. In this example, this agency liquor store's rate would change from 9.75 percent to 9.80 percent, and their commission percentage discount rate would no longer reflect the adjustment through ARM 42.11.309, because the average of the band it is in is more than the adjusted amount.

(8) The new effective commission percentage discount rate for each agent will be the higher of their band average or their current rate. If the agent qualifies for an adjustment, the adjustment will be effective July 1 following the review period.

(9) The sales bands with the new average commission percentage discount rates for each band will be sent to the agency liquor stores on or before March 1 following the review period.

(10) Public copies of the sales bands may be obtained by contacting:

 

 

Department of Revenue

Liquor Control Division

Liquor Distribution Bureau

P.O. Box 1712

Helena, MT 59624-1712