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Craft Beer Attorney: Helping StartUp Breweries since 2009 with biz formaton, licensing, trademarks
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What is a Board of Directors?

What is a Board of Directors? Do You Need One? How Does a Board Function?


Note: The Author is not an attorney, and is sharing knowledge based upon experience.


Starting a brewery, or any business for that matter, is usually a bit more complicated than one might first think. You think you just want to make and sell some beer, but before you get to that point, you need to decide what type of company you are putting together. Will your company be a sole proprietorship, a closely held family business or a corporation (public or private), comprised of several investors, some of whom may have significant investment stakes in the business?


Deciding how you will form your company is an important decision that will have long-term impacts on how you operate your business. A Board of Directors will be necessary if you are forming a corporation (C Corp, S Corp). This Board would represent the interests of the entire shareholder group, and has certain legal and fiduciary obligations. Most often the Board is made up of the company’s most significant shareholders and/or close associates with expertise in key functions such as legal, sales/marketing, retail operations, finance. If the company is an LLC or partnership, a Board of Directors is not required…a Board of Advisors, which doesn’t carry the legal and fiduciary obligations of a Board of Directors, may suffice.


The role and duties of the Board of Directors must be outlined in the corporate documents, oftentimes in the Articles of Incorporation and the Bylaws. It is important to note that a Board of Directors is a very different animal than an Advisory Board. The most important characteristics of a Board of Directors are that its members are elected annually by the company’s shareholders, and members of the Board assume a fiduciary responsibility.
A fiduciary responsibility is defined as:


”Fiduciary duty is a legal obligation of the highest degree for one party to act in the best interest of another. The party charged with the obligation is the fiduciary, or one entrusted with the care of property or money.” (Investopedia.com)

The fiduciary responsibility carries with it certain legal exposures, which one must be aware of and willing to accept in order to serve in a Director capacity. There are insurance protections for the company’s Board and the individual Directors, such as D & O (Directors and Officers) insurance and umbrella (personal liability) policies. It is important to educate yourself on these policies if your company will have a Board of Directors, or if you are asked to serve as a Director.


[For additional information about insurance protection, look for “Directors and Officers Liability” by Matt Hughes in the Start A Brewery Library.]

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Contributing Author                                 

Jeff Mendel                                            Partner/Director, Left Hand Brewing Company

 

Co-founder of Tabernash Brewing Company and the Colorado Brewers Guild, Jeff has been a partner/director at Left Hand Brewing Company, leads Beer Appreciation classes,  hosts beer and food pairing classes and has led personalized tours of GABF. His previous leadership roles in the industry include Director of the Institute for Brewing Studies, and Director of the National Microbrewers Conference and Trade Show.

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Tip Pooling & Tip Credits for Craft Breweries

Jon Hyman

“ No employment law is more misunderstood and misapplied by employers than the federal wage and hour law, the Fair Labor Standards Act ("FLSA"). There are more than 8,000 federal FLSA lawsuits filed per year. Importantly, nearly one quarter of those lawsuits are filed against employers in the accommodation and food service industry, including craft breweries.
Craft breweries get themselves in legal trouble under the FLSA because of the special manner in which service industry employees are compensated.

Is Your Craft Brewery Ready for the Golden Age of Unionizing

Jon Hyman

“Among the many lessons we will learn from the COVID-19 pandemic is its demonstration of the importance of union membership for essential workers. Of all the injustices exposed by the pandemic, the risks faced by non-union workers have become the most apparent. Non-union workers are being asked to risk their safety with little or no protections of their own.” Gary Perinar (executive secretary-treasurer of the Chicago Regional Council of Carpenters), The importance of unions is more obvious than ever during the COVID-19 

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Contract Brewing & Alternating Proprietorships: Definition and Differentiation, Part I

Candace L Moon

Why do either of these non-traditional business structures matter?


Contract Brewing and Alternating Proprietorships offer a few different opportunities, especially in light of today’s unpredictable economy and overall business/living environment. One example of this could be a small brewery who only sells beer in their taproom to be able to partner with a brewery that has a canning machine/line so that they can do “to-go” beer.

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Intent to Use Trademarks: Finalizing the Registration

Candace L. Moon

Intellectual Property

A trademark is a word, phrase, or design that identifies the source of goods or services, which protects a business’s commercial identity/brand and discourages others from adopting a name or logo that is “confusingly similar” to an existing trademark.  Common law trademark rights are acquired automatically when a business uses a name or logo in commerce, but marks registered with the U.S. Patent and 

PLAN

  • Define type of brewery

  • Determine proper state licensing

  • Trademark research

  • Consider fundraising options

  • Consider business entity choice

  • Consult an attorney

  • Consult a CPA

  • Navigate location regulations

  • Review Plan phase contracts

ACT

  • Location lease review

  • Apply for state licensing

  • Apply for federal licensing

  • Trademark registration

  • Research Marketing/Sales compliance

  • Review state compliance post licensing

  • Equipment/Ingredients Contracts

  • Understand labeling requirements

  • FDA registration

  • Brand registration/price posting if required

  • TTB licensing

  • Review Act phase contracts

oPEN

  • Maintain state compliance

  • Learn state excise tax requirements

  • Understand your state distribution laws

  • Understand growler/to go laws

  • Maintain federal compliance

  • Employment Law

    • Ownership Equity

    • Independent Contractors

    • Hiring protocol

    • Workers Comp

    • Compensation

    • Taxes/Benefits

    • Immigration law

  • Review Open phase contracts

Grow Graph

GrOW

  • Consider desired growth plan

  • Choose state(s) for distribution growth

  • Review franchise laws

  • Determine distributor expectations

  • Negotiate distribution agreements

  • Consider additional liability

  • Maintain compliance with growth

  • Owner/Investor relations

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