Oral Beer Distribution Agreements Do Get Franchise Protection and the Recent —Oak v. Yuengling Shows How to Plead Them

It finally happened. New York courts have at last spoken clearly on a question that’s haunted distributors and suppliers for decades: do oral agreements between brewers and wholesalers fall under the protections of Alcoholic Beverage Control Law §55-c? In Oak Beverages, Inc. & Boening Bros., Inc. v. Yuengling, the Second Department answered yes. Oral arrangements and courses of dealing are covered. That’s the good news. The bad news for the plaintiffs in this particular case? Their lawsuit was tossed for failing to spell out the essential and material terms of their supposed distribution agreements.

The story: Yuengling pulls the plug

Oak Beverages and Boening Bros. are longtime family-run distributors in New York. Back in 2001, they struck what were, by all accounts, oral distribution deals with Yuengling. The arrangements gave each distributor exclusive territories for Yuengling beer. For years the relationship rolled along, even surviving a 2011 federal lawsuit that ended with a stipulation: Yuengling agreed to keep selling them beer.

Then came 2021. On February 23, Yuengling sent a letter accusing both houses of underperformance and poor marketing compared to other wholesalers. The letter carried an extra sting: Yuengling claimed §55-c didn’t apply because there was no written agreement. A few weeks later, on April 8, Yuengling followed up with a formal 60-day termination notice, again citing “good cause” and pointing to the earlier allegations.

Oak and Boening responded with a lawsuit in Nassau County Supreme Court. They argued Yuengling had improperly terminated their distribution rights and had conspired with Manhattan Beer Distributors, the chosen replacement wholesaler, to force them out at a cut-rate value. The amended complaint piled on theories: §55-c violations, breach of contract, trade secrets, breach of good faith, antitrust. The trial court dismissed everything. On appeal, the Second Department affirmed most of the dismissal, but in doing so gave us something invaluable: guidance on how §55-c applies to oral agreements.

Why the plaintiffs still lost

The court’s central teaching was that §55-c(4) does indeed apply to non-written agreements. It relied on the statute’s definition of “agreement,” which explicitly includes “any contract, agreement, arrangement, course of dealing or commercial relationship.” That language, coupled with the legislative history stressing protection for family-owned distributors against at-will termination, made the holding inevitable.

But the court didn’t stop there. It looked closely at what Oak and Boening actually pled. Section 55-c(3) says an agreement must set forth “all essential and material terms, requirements, standards of performance and conditions of the business relationship.” The plaintiffs’ amended complaint, the court said, didn’t come close. They never laid out, even in general terms, what those “essential and material terms” were—things like territory definitions, brand obligations, performance benchmarks, marketing commitments, or course-of-dealing details. Without that level of specificity, the court said it couldn’t even evaluate whether Yuengling had good cause to terminate.

In short, while the absence of a written agreement won’t doom a §55-c case, the absence of pleaded detail will. That’s why this opinion reads like a how-to guide: tell the story of your arrangement in contract-level detail, or risk dismissal before discovery.

Copy-ready quotes for your next demand letter

This opinion is loaded with language that wholesalers (and their lawyers) can—and should—drop straight into correspondence with suppliers. A few highlights:

• On coverage:
  
  “Alcoholic Beverage Control Act § 55-c(4)… applies to non-written agreements.”
  
• On statutory purpose:
  
  The statute’s protections “extend… to non-written agreements, including arrangements, courses of dealing, and commercial relationships between brewers and beer wholesalers.” AND §55-c’s “written agreement” policy was meant to protect wholesalers from being forced into oral, at-will arrangements—not to deny them protection. Using it otherwise “contravenes the legislative purpose.”
  
• On why oral deals matter:
  
  “Yuengling seeks to use the statute as a sword against beer wholesalers… Such an interpretation contravenes the legislative purpose.”
  

These are the kinds of lines that make suppliers think twice when they argue “no writing, no franchise law.” After Oak, that argument has no legs.

Why this case matters

The opinion gives distributors a clear win on statutory interpretation: handshake deals and long-running courses of dealing are protected. But it also teaches a hard lesson about pleading. The law is there, but you have to present the relationship with enough specificity to show why termination lacked good cause. That means pulling together invoices, territory maps, marketing obligations, historical sales data, and notice-and-cure correspondence before you even draft the complaint.

Looking ahead, the case also raises strategic questions. Would this claim have fared differently in federal court under the federal notice-pleading standard? Should Oak and Boening have pressed harder on the argument that this was really a consolidation, which under §55-c requires pre-termination fair-market-value payments? Those are debates for another day, but the guidance for distributors is clear: oral distribution deals are enforceable under §55-c—if you plead them properly.

Another angle worth noting is that Yuengling’s maneuver could arguably have been framed as a subterfuge for consolidation under the statute. Section 55-c draws a bright line between terminations for performance issues and those that stem from a brewer’s consolidation policy. If the real endgame was simply shifting Yuengling brands into Manhattan Beer’s portfolio, the law treats that as consolidation and layers in strict requirements: a disclosed, nondiscriminatory multi-state policy, ninety days’ notice, and—most importantly—payment of the fair market value of the distribution rights before termination. Had the plaintiffs pressed that theory, they might have forced the compensation issue into the case and shifted the focus from pleading oral contract terms to whether Yuengling was obliged to pay for the very rights it was trying to reassign. That’s an important reminder for distributors: if a “performance” letter looks like cover for moving brands down the street, it may in fact trigger the statute’s consolidation protections and entitlement to fair market value.

Bottom line

Oak v. Yuengling is a landmark for New York wholesalers (and a good citation around the country for other wholesalers working under similar statutes with broad definitions of “agreement” for franchise protections). It clears away decades of uncertainty and affirms that oral agreements are protected under the franchise statute. But it also warns: plead the essential terms of your arrangement in detail, or your case won’t even reach discovery. For distributors, that means documenting your business relationship now, before trouble starts. For suppliers, it’s a reminder that the franchise protections in §55-c can’t be dodged by avoiding signatures.