Ark. Code Ann. » Title 3 Chapter 05
Arkansas Code Annotated

Ark. Code Ann. § 3-5-1108 (2026)

Compensation upon supplier's violation — Arbitration

✓ current as of May 2026
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  1. Except as provided for in this subchapter, a supplier that has amended, modified, cancelled, terminated, or refused to renew any agreement; or caused a wholesaler to resign from an agreement; or has interfered with, prevented, or unreasonably delayed, or, where required by this subchapter, has withheld or unreasonably delayed consent to or approval of, any assignment or transfer of a wholesaler's business, shall pay the wholesaler reasonable compensation for the diminished value of the wholesaler's business including any ancillary business which has been negatively affected by the act of the supplier. The value of the wholesaler's business or ancillary business shall include, but not be limited to, its good will. Provided, however, nothing contained in this subchapter shall give rise to a claim against the supplier or wholesaler by any proposed purchaser of a wholesaler's business.
      1. Should either party, at any time, determine that mutual agreement on the amount of reasonable compensation cannot be reached, the supplier or the wholesaler may send by certifed mail, return receipt requested, written notice to the other party declaring its intention to proceed with arbitration.
      2. Arbitration shall proceed only by mutual agreement of both parties.
      1. Not more than ten (10) business days after the notice to enter into arbitration has been delivered, the other party shall send written notice to the requesting party declaring its intention either to proceed or not to proceed with arbitration.
      2. Should the other party fail to respond within ten (10) business days, it shall be conclusively presumed that said party shall have agreed to arbitration.
    3. The matter of determining the amount of compensation may, by agreement of the parties, be submitted to a three-member arbitration panel consisting of one (1) representative selected by the supplier but unassociated with the affected supplier, one (1) wholesaler representative selected by the wholesaler but unassociated with the wholesaler; and an impartial arbitrator.
        1. Not more than ten (10) business days after mutual agreement of both parties has been reached to arbitrate, each party shall designate, in writing, its one (1) arbitrator representative, and the party initiating arbitration shall request, in writing, a list of five (5) arbitrators from the American Arbitration Association or its successor and request that the list be mailed to each party by certified mail, return receipt requested.
        2. Not more than ten (10) business days after the receipt of the list of five (5) choices, the wholesaler arbitrator and the supplier arbitrator shall strike and disqualify up to two (2) names each from the list.
      2. Should either party fail to respond within the ten (10) business days or should more than one (1) name remain after the strikes, the American Arbitration Association shall make the selection of the impartial arbitrator from the names not stricken from the list.
      1. Not more than thirty (30) days after the final selection of the arbitration panel is made, the arbitration panel shall convene to decide the dispute.
      2. The panel shall conclude the arbitration within twenty (20) days after the arbitration panel convenes and shall render a decision by majority vote of the arbitrators within twenty (20) days from the conclusion of the arbitration.
      3. The award of the arbitration panel shall be final and binding on the parties as to the amount of compensation for the diminished value.
    6. The cost of the impartial arbitrator, the stenographer, and the meeting site shall be equally divided between the wholesaler and the supplier. All other costs shall be paid by the party incurring them.
        1. After both parties have agreed to arbitrate, should either party, except by mutual agreement, fail to abide by the time limitations as prescribed in subdivisions (b)(2), (4), and (5) of this section, or fail or refuse to make the selection of any arbitrators, or fail to participate in the arbitration hearings, the other party shall make the selection of its arbitrators and proceed to arbitration.
        2. The party who has failed or refused to comply as prescribed in this section shall be considered to be in default.
      2. Any party considered to be in default pursuant to this subsection shall have waived any and all rights the party would have had in the arbitration and shall be considered to have consented to the determination of the arbitration panel.

History. Acts 1991, No. 8, § 7; 1991, No. 866, § 7.

Case Notes

Applicability.

Distributor's claim under the Arkansas Franchise Practices Act, § 4-72-201 et seq., was not a claim against the company by a proposed purchaser of a wholesaler's business but, rather, by its own franchisee; the company's alleged interference with the potential purchase of another franchise was merely evidence used to support the distributor's claim and, thus, the distributor's claim was not preempted by this section. Miller Brewing Co. v. Ed Roleson, Jr., Inc., 365 Ark. 38, 223 S.W.3d 806 (2006).

Transfer.

Brewing company's obligation under § 3-5-1101 et seq., to approve a transfer of the wholesaler's business was conditioned upon the distributor's submitting written notice of intent to transfer; without this written notice, the company had no duty to approve a transfer. Southeastern Distrib. Co. v. Miller Brewing Co., 366 Ark. 560, 237 S.W.3d 63 (2006).

Notes of Decisions
Cited in 3 cases, 1998–2006 · leading case: Se. Distrib. Co. v. Miller Brewing Co., 237 S.W.3d 63 (Ark. 2006).
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Se. Distrib. Co. v. Miller Brewing Co., 237 S.W.3d 63 (Ark. 2006). · cites it 14× “Specifically, Southeastern asserts that Miller violated Ark. Code Ann. § 3-5-1108 , which provides in pertinent part: (a) Except as provided for in this subchapter, a supplier that has amended, modified, cancelled, terminated, or refused to renew any agreement; or caused a…”
Miller Brewing Co. v. Ed Roleson, Jr., Inc., 223 S.W.3d 806 (Ark. 2006). · cites it 16× “NOTES [1] We note that under Ark.Code Ann. § 3-5-1108 (Repl.1996), a beer supplier may not terminate a distributor agreement without payment of reasonable compensation to the distributor.”
Proctor v. Andrews, 972 S.W.2d 729 (Tex. 1998). “§ 15-541(A) (West Pocket Part 1997); ArkCode Ann. § 3-5-1108 (Michie 1996); Cal.”
— Ark. Code Ann. § 3-5-1108(a) — 2 cases
Miller Brewing Co. v. Ed Roleson, Jr., Inc., 223 S.W.3d 806 (Ark. 2006). “NOTES [1] We note that under Ark.Code Ann. § 3-5-1108 (Repl.1996), a beer supplier may not terminate a distributor agreement without payment of reasonable compensation to the distributor.”
Se. Distrib. Co. v. Miller Brewing Co., 237 S.W.3d 63 (Ark. 2006). “Specifically, Southeastern asserts that Miller violated Ark. Code Ann. § 3-5-1108 , which provides in pertinent part: (a) Except as provided for in this subchapter, a supplier that has amended, modified, cancelled, terminated, or refused to renew any agreement; or caused a…”
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