What Jack Daniel Grill Tells Us About Trademark Licensing in Florida’s Alcoholic Beverage Industry

The Florida ABT’s 1998 Declaratory Statement tells that licensed alcoholic beverage retailers can pay manufacturers for the use of their trademark under certain terms.

Friday’s Wanted to Create the Jack Daniel’s Grill

In Declaratory Statement 98-01, the ABT was asked whether Friday’s Hospitality Worldwide Inc. (“Friday’s”, operators of the same restaurant chain at the time), a alcoholic beverage vendor, could use the name Jack Daniel’s Grill under a trademark licensing agreement with Jack Daniel Distillery (“JDD”), an alcoholic beverage manufacturer. At issue was the meaning and enforcement of Florida’s Three Tier System (principally Florida Statutes Section 561.22) and Tied House Evil Statute (Section 561.42). In a detailed, 24 page decision, the Director of the ABT concluded that Florida law did not prohibit Friday’s to contract with Jack Daniel Distillery for use of the Jack Daniel’s name.

Friday’s wanted to open a new restaurant called Jack Daniel’s Grill in Orlando, Florida. (Ultimately, the Jack Daniel’s Grill name was used for branding certain Friday’s products.) For this purpose, Friday’s entered into a trademark licensing agreement with Jack Daniel Distillery, a copy of which was provided to the ABT. In its petition, Friday’s described the licensing agreement this way:

“[It is] a fixed fee agreement with no obligation by the licensed vendor to order, display, sell, serve, or promote JDD’s alcohol beverage brands. JDD is not entitled to any percentage payments from Friday’s business income. Moreover, JDD has not obligated the vendor to do anything other than meet certain standards in the use of the trademark, and comply with all local, state, and federal laws within the State of Florida.”

Friday’s also stated:

“JDD has no direct or indirect financial interest in the business of Friday’s and has not provided Friday’s with any gift, loan of money or property, or rebates. In fact, JDD has sold the right to use a trademark for a fixed price, as it would any product it sells.”

ABT’s Interpretation of Florida’s Three Tier System and Tied House Evil Statute

In Declaratory Statement 98-01, the ABT Director stated that it is the duty of the ABT to construe and interpret the provisions of Florida Statues Section 561.22 and Section 561.42 and apply these provision to the stated facts in a reasonable manner that comports with the purpose, intent and spirit of statutes and avoids “an absurd result.” The opinion continues with two important principals. First, “a statute should be interpreted so as to give effect to the clear and unambiguous legislative intent.” Second, “a statute should be interpreted so as to avoid arbitrary, absurd and/or unreasonable results.” The opinion states that a statute must be interpreted in a way that avoids unreasonable, harsh or absurd consequences.

Section 561.22, as foundation for Florida’s Three Tier System, states that  a licensed alcoholic beverage vendor in Florida is prohibited from having a connection or affiliation with an alcoholic beverage manufacturer, through stock ownership or control, directly or indirectly.

The Director focused more attention on Florida’s Tied House Evil Statute, Florida Statutes Section 561.42. The Tied House Evil Statutes prohibits a licensed manufacturer or distribution from having “any financial interest, directly or indirectly, in the establishment or business of any vendor licensed under the [Florida] Beverage Law.” In addition, Section 561.42(1) prohibits licensed manufacturers and distributors from “assist[ing] any vendor by any gifts or loans of money or property or property of any description.” The overall intent of the Tied House Evil Statute, according to the Director, was to divorce the manufacturing and distributing activities of the alcohol business from that of retail vendors. It is intended to prevent manufacturers and distributors from having a controlling or financial interest in a vendor’s business.

ABT Director Found No Prohibited Interest in Jack Daniel’s Grill

In evaluating Friday’s proposal, the Director found that trademark licensing agreement did not give JDD the opportunity to control the management or operation of Friday’s retail vendor establishment or to control Friday’s decisions concerning the sale and promotion of alcoholic beverages. For this reason, the Director concluded that the trademark licensing agreement did not violate Florida Statutes Section 561.22.

Concerning the Tied House Evil Statute, the Director found that Friday’s trademark licensing agreement would cause JDD to be only remotely affiliated with Friday’s. However, it was clear to the Director that Friday’s would independently operate and manage its retail vendor restaurant, and JDD would not be involved in the decisions of Friday’s with respect to the sale of alcoholic beverages, including those manufactured by JDD and other manufacturers.

The Director concluding that JDD’s non-controlling interest, pursuant to the trademark licensing agreement, would not violate either the spirit or the intent of Florida Three Tier System or Tied House Evil Statute.

The Director cautioned that the specific terms of the trademarking licensing agreement matter. He wrote:

“Care must be taken to distinguish contract terms that protect the trademark and contract terms that affect the management and operation of the vendor’s licensed business. The latter are impermissible.”

The Director also noted that the constraints placed on licensed alcoholic beverage vendors in Florida, under the Three Tier System and the Tied House Evil Statute, a manufacturer maybe required to surrender the level of control over its trademark’s use as it would have otherwise been permitted to exert in a trademark licensing arrangement with a party that is not a licensed vendor.

For more about the ABT’s views on the Florida’s Three Tier System, see What Burger King Tells Us About Florida’s Three Tier System.

Do you have any questions about trademark licensing in Florida’s alcoholic beverage industry? Contact us at contact@brewerlong.com to schedule a consultation with a beverage attorney.

Because we’re attorneys: Disclaimer.

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