(1) Subject to the terms and conditions stated in this rule, an alcoholic beverages licensee may employ a manager as the licensee's agent to oversee the alcoholic beverages business conducted in the licensee's licensed premises. The manager or the person designated to represent the manager must possess a past and present status as a business person and citizen who demonstrates the likelihood of operating the licensed establishment on behalf of the licensee in compliance with all applicable laws of the state and local governments.

(2) Within 30 days of employing the manager, the licensee must file with the department a signed original of the written management agreement, a personal history statement, and a complete set of fingerprints as required by ARM 42.12.101, that clearly disclose the following information:

(a) the manager's name, address, telephone number, mailing address, if different from street address, and one of the following:

(i) social security number for individuals; or

(ii) federal identification number for business;

(b) the amount of compensation; and

(c) the specific duties and responsibilities delegated to the manager by the licensee.

(3) The department will review the agreement for compliance with the following standards:

(a) the licensee must retain the possessory interest in the premises through ownership, lease, rent, or other agreement with the owner of the premises;

(b) while the agreement may delegate duties to the manager, the licensee must retain ultimate control, liability, responsibility, and accountability for the retail alcoholic beverage operation. The agreement may not assign or limit any of the rights or responsibilities of ownership. In particular, the agreement may not grant or assign to the manager:

(i) control of business hours, types of alcoholic beverage products sold, selling price, level of inventory maintained, and overall business atmosphere;

(ii) exclusive authority over business accounts and operation funds;

(iii) authority to remodel or otherwise make changes in the business operation requiring non-routine actions;

(iv) ultimate decision-making authority regarding the hiring, firing, advancement or promotion, or any other change of status of other employees;

(v) liability for all business expenses and losses, either directly or through an indemnification agreement with the licensee. The licensee may require the manager to do the ministerial act of paying the expenses, but this must be accomplished by using the licensee's funds; and

(vi) ownership of the inventory or the right to use or dispose of it at will.

(c) the licensee must maintain an active participation in the business operation sufficient to ensure the proper and lawful conduct of the business, and execute all reports required by governmental agencies that attest to the licensee's ownership and certify compliance with applicable statutes and regulations. The licensee may work in the establishment at any time;

(d) the agreement may not be assignable by the manager to a successor manager without the written consent of the licensee;

(e) the agreement may not place any restrictions on the licensee's right to transfer, mortgage, hypothecate, or alienate the license, or change the location of the operation;

(f) the agreement must be terminable upon the licensee transferring the license, selling the business, or otherwise ceasing business operations at the licensee's option;

(g) the agreement must provide for compensation either as a fixed amount, a percentage of gross sales, or a combination of fixed amount and percentage of gross sales;

(h) the compensation of the manager must be commensurate with the duties performed, cannot consist of net profits from the business, and cannot be less than the federal wage and hourly standards for an individual; and

(i) the management agreement must establish a principal agent, employer-employee, or other type of agency relationship, making the manager responsible to the licensee for the performance of assigned duties, while the licensee is responsible for the proper performance of the manager.

(4) Management agreements failing to meet any of the standards set forth in (1), (2), and (3) will be marked as rejected and returned to the licensee, together with a written explanation of the reasons for the rejection. If the deficiencies are not corrected within 30 days of the time set by the department, the tendered management agreement will be deemed to be void.

(5) A licensee's failure to remain in compliance with the terms of the approved management agreement or failure to terminate operations under a void management agreement shall constitute a violation of this rule and may subject the licensee to administrative action.