16-4-418. Concession agreements. (1) Except for entities licensed under 16-4-105(1)(e) or 16-4-201(8) on or after January 1, 2021, the department may allow entities licensed under 16-4-105 or 16-4-201 to enter into concession agreements with unlicensed entities to serve alcoholic beverages. A licensee may enter into a maximum of three concession agreements for each license at any given time.

(2) To be considered for approval, a concession agreement must:

(a) demonstrate that the licensed premises is a contiguous premises that includes the space utilized by the concessionaire; and

(b) provide that the licensee retains ultimate control over and responsibility for operating the license, including:

(i) the ordering, purchase, sale, and service of alcoholic beverages;

(ii) the right to discipline or otherwise sanction any employee in relation to the service of alcoholic beverages;

(iii) reconciling the proceeds of alcoholic beverage sales at least monthly;

(iv) terminating the concession agreement with cause where cause includes but is not limited to any violation of Title 16 and the sale or transfer of the license; and

(v) the exclusive operation of all gaming activities if the licensee offers any gaming.

(3) A licensee's gaming endorsement may not be extended through a concession agreement.

(4) Nothing in this section precludes a licensee and a concessionaire from sharing employees.

(5) A licensee may enter into a management agreement to satisfy the provisions of subsection (2)(b).

(6) (a) The licensee may compensate the concessionaire for the sale of alcoholic beverages based only on one of the following or a combination of the following considerations:

(i) a percentage of gross alcoholic beverage sales;

(ii) a percentage of employee overhead; and

(iii) a fixed dollar amount to be negotiated by the parties.

(b) If the licensee and concessionaire change the structure of the compensation arrangement, the department must be provided with a copy of the amended compensation arrangement but does not have the ability to deny the amended compensation arrangement as long as it meets the requirements of this section.

(7) (a) Other than changes provided in subsection (6)(b), a licensee shall submit any proposed modification to an existing concession agreement for review and approval by the department. Changes include but are not limited to proposed changes in ownership of the license and the parties of an existing concession agreement choosing to operate under the provisions of this section. The department shall approve or deny the application within 30 business days unless additional information is required. The existing concession agreement may remain in place pending department approval or denial. An applicant may apply for temporary operating authority pending approval for a change in ownership of a license or to operate under the provisions of this section without terminating an existing concession agreement.

(b) Parties with a concession agreement existing prior to May 14, 2021, that elect to operate under the provisions of this section shall operate under the existing concession agreement pending department approval of the new concession agreement.

(8) A concession agreement does not constitute an ownership interest in the license.

(9) The department shall create a standardized concession agreement that includes only the requirements of this section.

(10) The concessionaire shall pay the department an application fee of $500 for each new concession agreement or for existing concession agreements that elect to operate under the provisions of this section. The new concession agreement application fee does not apply to modification of existing concession agreements. The annual renewal fee for each concession agreement is $100.

(11) (a) For the purposes of this section, the term "contiguous premises" means the interior portion of the premises that must be a continuous area under the control of the licensee or the concessionaire and not interrupted by any area in which one of the parties does not have control.

(b) The term includes multiple floors on the premises and common areas necessarily shared by multiple building tenants in order to allow patrons to access other tenant businesses or private dwellings in the same building, including but not limited to entryways, hallways, stairwells, and elevators.