Contract Liquor Agency Operations Manual

Effective Date: February 2019

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Foreword

Under Ohio Revised Code Chapters 4301 and 4303, the State of Ohio, Department of Commerce, Division of Liquor Control (DLC) is responsible for controlling the manufacture, distribution, licensing, and regulation of beer, wine, mixed beverages, and spirituous liquor (intoxicating liquor containing more than 21 percent alcohol by volume).

The DLC manages spirituous liquor wholesale and retail operations with the goal of increasing profits without encouraging increased consumption. DLC’s purpose is to effectively gain and retain the goodwill of the public and to sell and distribute spirituous liquor in clean, attractive, and competent sales outlets. The DLC accomplishes this through Contract Liquor Agencies (Agencies) across the State. The JobsOhio Beverage System (JOBS) through the DLC, is the sole purchaser and distributor of spirituous liquor in Ohio. The DLC selects the spirituous liquor products offered for sale in Ohio, fixes the wholesale and retail price for the spirituous liquor products, and determines the spirituous liquor inventory that a Contract Liquor Agent (Agent) sells on behalf of JOBS at no cost to the Agent. Agents own and operate private retail outlets that sell other goods and services to the public, such as beer, wine, mixed beverages, bread, milk, and other grocery items. A Contract Liquor Agency (Agency) is the physical location approved for the sale of spirituous liquor. Agents sell spirituous liquor products owned by JOBS on consignment in exchange for a sales-based commission per their Agency Agreements (defined below). Profits from the sale of spirituous liquor are dedicated to funding Ohio’s economic development efforts.

DLC and JOBS prepared this Agency Operations Manual (Manual) to serve as guidance for Agents to perform the activities necessary to fully achieve the public service objective and meet their obligations pursuant to their Agency Agreements.

It is every Agent’s responsibility (and that of an Agent’s employees) to strictly adhere to the information contained herein, without deviation. Failure to comply with the policies and procedures contained in this Manual may result in a breach of the Agency Agreements and could result in action against the Agent pursuant to the contract, up to and including termination of the Agency Agreements.

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Table of Contents

1.0 Agency Agreement ........................................................................................................ 1 2.0 Agency Responsibilities ............................................................................................... 2

2.1 Agency Emblem ........................................................................................................... 2 2.2 Agent’s Employee Requirements: Customer Service and DLC/JOBS Representation . 2 2.3 Safety and Security Requirements ............................................................................... 2 2.4 Merchandising Requirements ...................................................................................... 2 2.5 Agency Appearance Standards.................................................................................... 3 2.6 Banking ........................................................................................................................ 3 2.7 Hours ........................................................................................................................... 4 2.8 Pricing .......................................................................................................................... 4 2.9 Shelf Tags ................................................................................................................... 4 2.10 Communications .......................................................................................................... 5

2.10.1 DLC JOBS Communications ................................................................................. 5 2.10.2 Agency Communications ...................................................................................... 5

2.11 Ownership of Inventory ................................................................................................ 6 2.11.1 Inventory Management System (IMS) ................................................................... 6 2.11.2 Inventory Audits .................................................................................................... 6

2.12 Record Keeping ........................................................................................................... 6 2.13 Advertising ................................................................................................................... 7

3.0 Sales Operations ........................................................................................................... 8 3.1 Product Rotation Requirements ................................................................................... 8 3.2 Sales & Reporting Requirements ................................................................................. 8

3.2.1 Clover Station Point-of-Sale System (Clover POS) ............................................... 8 3.2.2 Integrated Point-of-Sale System (Integrated POS) ................................................ 8 3.2.3 Wholesale Sales Terminal .................................................................................... 8

3.3 Retail Sales Transaction .............................................................................................. 8 3.4 Wholesale Sales Transactions ..................................................................................... 9

4.0 Operational Procedures ...............................................................................................11 4.1 Inventory Cycle Counts ...............................................................................................11 4.2 Inventory Adjustments ................................................................................................11 4.3 Transfer Orders ..........................................................................................................11

4.3.1 Weekly or Bi-weekly Transfer Orders ...................................................................12 4.3.2 Agency-to-Agency Transfer Orders ......................................................................12 4.3.3 Minimums and Restricted Product Status ............................................................12

4.4 Receiving ....................................................................................................................13 4.5 Posting ........................................................................................................................13

5.0 Training .........................................................................................................................14 5.1 Alcohol Education and Certification .............................................................................14 5.2 IMS Training ...............................................................................................................14

6.0 Technology Requirements ...........................................................................................15 7.0 Performance Metrics ....................................................................................................16

7.1 Compliance Visits .......................................................................................................16 7.2 Results ........................................................................................................................17 7.3 Contract Liquor Agency Compliance Progression .......................................................18

8.0 OHLQ Website ..............................................................................................................19 9.0 Contact Us ....................................................................................................................20

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1.0 Agency Agreement

This Agency Operations Manual is incorporated into and made a part of the Agency Agreements executed by and between Agent and DLC, and Agent and JOBS (the Agency Agreements). Terms not otherwise defined herein will have the same meanings ascribed to them in the Agency Agreements. Any inconsistencies between this Agency Operations Manual and the Agency Agreements will be resolved in favor of the Agency Agreements. Agent agrees to adhere to the Agency standards set forth below.

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2.0 Agency Responsibilities

2.1 Agency Emblem

Agent will affix the Agency emblem, provided by the DLC, to the Agent’s storefront window in a location that is visible to the public.

2.2 Agent’s Employee Requirements: Customer Service and DLC/JOBS Representation

A high level of customer service is required of every Agent and their employees. The way an Agent’s personnel conduct themselves is a direct reflection, either favorable or otherwise, on the DLC and JOBS. An Agent and his/her employees shall remain current on all training required by the DLC and JOBS. Agent’s staff must be knowledgeable regarding the spirituous liquor inventory in order to answer customer questions. Agent’s staff must present themselves in a professional, neat and clean manner.

2.3 Safety and Security Requirements

Safety standards must be maintained in compliance with the following requirements:

• Parking lot must be well-maintained and free of pot holes, debris, ice or snow, or other safety hazards

• Parking lot, entrances, and exits must all be adequately lit and accessible

• Agency interior must be free of clutter, well lit, and have easily accessible aisles for all customers

• Agency location must have an operable security system in use at all times

• Shelving units must be properly constructed to prevent tipping or unsafe display of spirituous liquor

• Delivery area must be clearly identified with no safety hazards present for proper unloading of spirituous liquor

• Fire alarms must be in working order and placed, at a minimum, in both the storage and retail areas

• Each Agent must have the appropriate number of fire extinguishers to meet OSHA requirements for that Agency

• Ceiling tiles must be free from water damage and intact

• Floors must be swept and mopped on a regular basis

2.4 Merchandising Requirements

The Agent shall provide such shelving and storage space as required in the Agency application. This includes, but is not limited to, the following:

• Minimum shelf depth of 22 inches

• Minimum spacing of 14 inches between rows of shelving o Minimum spacing of 10 inches between rows of shelving for pint size sections

• Minimum of 20 linear feet (Ex: 4-foot section by 5 rows high) for products identified as Last Call, Value Added Packs, or New Items as specified by the DLC

The DLC has an established shelf set for all spirituous liquor products. No additional store merchandise or materials are to be intermingled on a spirituous liquor shelf without DLC’s

preapproval. Vendors or Vendor representatives are not to reset an Agency’s shelves under any

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circumstance. Any spirituous liquor movement, shelf reset or Agency store remodel requiring moving the shelf set must be preapproved by the DLC. New product placement guidelines will be posted on www.ops.OHLQ.com (OPS.OHLQ Website) and updated following each quarterly listing period. Product displays are determined by the DLC and must be strictly adhered to.

The DLC may provide a quarterly publication in the form of a magazine. Copies of the magazine will be delivered to Agents on a quarterly basis. This magazine is provided for distribution to both wholesale and retail customers. All Agents must display the magazines on the magazine stands provided.

2.5 Agency Appearance Standards

The Agent must maintain a satisfactory visual appearance in its Agency for customers. This includes:

• All signage and display materials must be in good condition o Current DLC-provided shelf tags o Display signage as provided by the DLC o Brand category displays o Aisle blades o 50 ml displays

• No hand-written signage is permitted

• Aisles must be clean and free of clutter

• Customer service counters must remain clean, neat, and free of clutter

• Shelves shall not be overstocked with products rendering the shelf sets ineffective

• Bottles and shelving shall be clean and dust free

• Product bottles must be placed with front labels facing the consumer

• Signage or marketing materials not approved by the DLC are not allowed in the spirituous liquor sales area

2.6 Banking

JOBS will withdraw all spirituous liquor sales receipts, inclusive of taxes where applicable, from the Agent’s Gross Sales Account by ACH transfer in accordance with the Bank Sweep Schedule shown in Table 1 (below).

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Bank Sweep Schedule**

Sales Date Sweep Date*

Monday Thursday

Tuesday Friday

Wednesday Monday

Thursday Tuesday

Friday Tuesday

Saturday Wednesday

Sunday Wednesday

* Assumes timely and accurate sales posting **Federal holidays may cause schedule adjustment

Table 1- Bank Sweep Schedule

Agent is responsible for reconciling collected cash receipts to the spirituous liquor sales records reported on the DLC inventory management system (IMS) for each day of sales.

2.7 Hours

Agent is responsible for communicating any changes in operating hours to the DLC via the OPS.OHLQ Website. Operating hours are subject to DLC approval. If an Agency will be closed on a routine operating day, the Agent is responsible for notifying the LESC that no sales reports will be provided for that day, and why.

2.8 Pricing

Price bulletins for each new month will be available through the IMS near the end of the current month. During this time, the price changes will also be available through the WebAPI for uploading to the Agent’s point-of-sale (POS) system via their chosen integrator. The Monthly Price Bulletin file supersedes any previous pricing material. The Agent is responsible for performing required steps to upload this price file according to their POS directive. The Agent is responsible for ensuring all UPCs impacted by the price change are scanning properly on their POS terminal after the update on the first day of the month. Occasional mid-month price changes may be necessary and are expected to be tested in the same manner as price changes effective the first day of the month. The DLC will email communications to Agents with instructions on how to update when needed.

The prices in a wholesale terminal will update automatically on the first day of each month, or as needed, so no action is required by an Agent to update a wholesale terminal.

2.9 Shelf Tags

Each product of spirituous liquor on the Agency shelves must be properly identified with the state brand code (i.e. the unique product identifier assigned by the state), the product name, and the current retail price. Retail shelf tags containing this required information will be provided by the DLC. Only those tags provided by, or approved by, the DLC are to be used for the sale of spirituous liquor. Retail shelf tags for each product with price changes will be sent monthly. These tags need to be attached to the Agency shelves before the first sale of spirituous liquor on the first day of the month.

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Complete shelf tag sets for all brands will be sent to Agencies every April and October, and all shelf tags must be changed at this time. Shelf tags can be printed by the Agent via the IMS as needed.

2.10 Communications

2.10.1 DLC JOBS Communications

All communications sent to Agent from DLC or JOBS must be read in a timely manner, and any given directions must be followed.

2.10.2 Agency Communications

Agent is required to accurately record and maintain a valid electronic mail address and phone number on the OPS.OHLQ Website at all times during the Term of their Agency Agreements. Agent is required to check the account for the provided electronic mail address at least once every day for communication from the DLC or JOBS. Agent and its employees are required to contact the Liquor Enterprise Service Center (LESC) via phone (877-812-0013) or email (liquorAgencyhelp@com.state.oh.us) to keep the DLC and JOBS informed for a number of reasons, including, but not limited to, the following:

• Any questions about an electronic mail communication or other provided direction

• Any instance of crime, fire, flood or other interruption of service

• To request any movements, or to request assistance in setting new items in the shelf set as described in Section 2.1.3

• If any signage or display material identified in Section 2.1.4 requires replacement

• Any unreconciled differences between cash receipts and sales reports in the IMS

• Any request for modification of operating hours

• Notification if an Agency will be closed on a normal operating day

• Increases to IMS generated transfer orders

• Agency to Agency transfers

• A change in a product minimum

• A change in product availability in an Agency (i.e. request to lift a restriction)

• To report the Agency radio frequency (RF) scanner(s) is not functional

• To report if a delivery driver left the Agency before correct receiving procedures could be completed

• If wholesale or retail sales terminal is not performing correctly

• If wireless internet connection is not functioning properly

• To seek approval for any advertisement Upon notification of these and any other instances, the DLC will provide the Agent with the correct procedures to follow.

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2.11 Ownership of Inventory

All inventory of spirituous liquor that is shipped, delivered, and in the custody and care of an Agent is owned by JOBS. Agent will comply with any direction given regarding inventory, including, but not limited to, transfer of inventory in and/or out of Agency.

JOBS does not transfer its title to the inventory of spirituous liquor until the spirituous liquor has been sold by the Agent to a retail or wholesale customer at the price fixed by the DLC.

At no time may an Agent, or an Agent’s employees, keep, have, or possess on the Agency premises any spirituous liquor other than inventory belonging to JOBS and received by the Agent for sale in its Agency. Spirituous liquor that has been purchased by the Agent or its employees for the Agent’s or employee’s personal use must be removed from the Agency premises.

2.11.1 Inventory Management System (IMS)

Agencies must use the IMS provided by the DLC. The IMS is provided to aid the Agent in maintaining accurate and reliable inventory records. Agent will hold in confidence and shall not disclose any information, drawings or other materials, either in written or oral form, relating to software used by the Agent, including the IMS.

The DLC retains ownership rights to all peripheral equipment or computer support systems provided to an Agent to record data, maintain inventory, or otherwise conduct the business of selling spirituous liquor. Agent must take reasonable care of all equipment in the Agent’s possession belonging to the DLC.

2.11.2 Inventory Audits

Audits of spirituous liquor inventory will be conducted by representatives of the DLC or JOBS on a regular basis. Audits may be announced or unannounced. In the event the audit is announced, the Agent will be notified via phone call up to 24 hours in advance of the audit. Agent is required to make the Agency available to the representatives of the DLC or JOBS for purposes of counting spirituous liquor inventory at the time communicated to the Agent.

Physical inventory counts and audits will be verified against the IMS records. The Agent must be available with adequate staffing to assist in recounts and verification of discrepancies.

The DLC or JOBS will notify the Agent of any financial obligation that arises as a result of the physical inventory count or audit and will communicate the amount of the financial obligation and the scheduled date of bank sweep for any balance due.

2.12 Record Keeping

Agents must create and use a filing system for their records of all business relating to the sale of spirituous liquor. All records should be filed with the most current date in the front of the file. The following records are to be kept on file for one (1) year:

• Transfer Orders and Agency Transfers

• Inventory Adjustment Form

• Overage, Shortage & Damage Form

• Agency Compliance Report

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• Wholesale Invoices by Permit Holder - This file should contain a copy of the valid permit and a written authorization listing the persons allowed to pick-up spirituous liquor for the premises. A copy of the permit holder’s identification card with the proper signatures is also acceptable.

2.13 Advertising

Off-premises advertising includes, but is not limited to, printed publications, social media, billboards, and television and radio advertisements. Any off-premises spirituous liquor advertising from the Agent for Division-created or -provided promotions such as bottle lotteries, raffles, barrel release events and other promotion, is permitted. Agent off-premises advertising for anything other than the above-referenced Division promotions, which includes Last Call, rebates, and sweepstakes, must abide by all of the following:

• The advertisement cannot promote a single broker, supplier or brand.

• Advertisement must be general in nature. o For example, you may list all tequilas in stock or even all premium tequilas in stock

but cannot single out a brand or set of brands from one broker or supplier.

• Advertisements may not represent, portray or make any reference to children or Santa Claus.

• Advertisements may also not condone or encourage excessive use of alcoholic beverages.

General requirements for advertising alcoholic beverages may be found in Ohio Administrative Code 4301:1-1-44. All advertisements must comply with this rule. If an Agent is not sure whether an advertisement complies with the above requirements and OAC 4301:1-1-44, they must contact the LESC prior to utilizing the advertisement.

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3.0 Sales Operations

Under no circumstances shall spirituous liquor be given to a customer, whether retail or wholesale, without payment in full. It is unlawful to make a spirituous liquor sales transaction via a drive-thru. An Agent is not permitted to deliver, mail, or otherwise send spirituous liquor inventory to a retail consumer. An Agent agrees that it will limit any e-commerce transactions for spirituous liquor to those sales that occur when the customer appears in person at the Agency to complete the sales transaction.

Agent and its employees are prohibited from improperly redeeming coupons or rebates for spirituous liquor products.

3.1 Product Rotation Requirements

Agent will be responsible for managing the spirituous liquor inventory in its possession. The DLC and JOBS requires Agent and its employees to use a first in first out inventory management method that ensures product received first into an Agency leaves the location first.

3.2 Sales & Reporting Requirements

3.2.1 Clover Station Point-of-Sale System (Clover POS)

Agents operating the Clover POS must submit daily sales at the close of each business day. These sales must be submitted by no later than 2:45 AM on the day following the close of business for the day being reported. Agent must only submit sales from the designated Clover POS master device. The Clover POS requires the Agent or its employee to select the “Send File” button in the DLC application (app) from the master Clover POS device at the close of each business day to report daily sales.

3.2.2 Integrated Point-of-Sale System (Integrated POS)

Agents not operating the Clover POS must follow the daily sales submission process as provided by their POS integrator. As noted in Section 3.2.1, daily sales must be submitted by no later than 2:45 AM on the day following the close of business for the day being reported. Even if the Integrated POS submits sales automatically (with no action from the Agent), daily submission of sales is the Agent’s responsibility. It is the sole responsibility of an Agent to work with its integrator to resolve any daily sales submission errors.

3.2.3 Wholesale Sales Terminal

Wholesale orders are processed through the wholesale sales terminal provided by the DLC. The wholesale sales terminal reports sales transactions directly to the IMS. Agencies that are permitted to perform wholesale sales transactions are required to follow the DLC provided training on operating and maintaining the wholesale sales terminal to ensure that accurate data is reported to the IMS.

3.3 Retail Sales Transaction

A retail sales transaction is any sale of spirituous liquor that is conducted through an approved POS system at the price determined by the DLC to a personal consumer and not for resale. For all retail sales transactions, the Agent and its employees shall strictly abide by the following based on Ohio law:

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• No person under the age of twenty-one (21) is permitted to purchase beer or intoxicating liquor. Satisfactory proof of a retail sales customer’s age is the direct responsibility of the Agent and its employee prior to performing the retail sales transaction. Acceptable forms of identification are:

o a valid driver’s license or commercial driver’s license o an official State identification card o a valid passport issued by either the U. S. or a foreign country, or o a military identification card issued by the U.S. Department of Defense

The form of identification must display a picture of the person making the purchase and show that the person was at least 21 years old at the time of the sales transaction.

• Agent and its employees are prohibited from performing a retail sales transaction for any person that appears to be intoxicated.

• Agent and its employees performing retail sales transactions must be eighteen (18) years old or older.

In addition to cash, an Agent may accept store gift certificates and credit or debit cards for the retail purchase of spirituous liquor in accordance with Ohio Revised Code Section 4301.19, which states:

A PERSON APPOINTED BY THE DIVISION TO ACT AS AN AGENT FOR THE SALE OF SPIRITUOUS LIQUOR PURSUANT TO SECTION 4301.17 OF THE REVISED CODE MAY PROVIDE AND ACCEPT GIFT CERTIFICATES AND MAY ACCEPT CREDIT CARDS AND DEBIT CARDS FOR THE RETAIL PURCHASE OF SPIRITUOUS LIQUOR.

Retail sales customers are not permitted to return spirituous liquor for any reason, without prior authorization of the DLC.

3.4 Wholesale Sales Transactions

A wholesale sales transaction is a sale of spirituous liquor to an active permit holder authorized to purchase spirituous liquor for sale at retail for on-premises consumption.

If authorized to sell spirituous liquor at wholesale to liquor permit holders authorized to sell spirituous liquor at retail for on-premises consumption, the DLC will assign the permit holders and provide Agent with the permit holder information for those wholesale accounts. The wholesale sales transaction is to be completed via the wholesale terminal provided by the DLC. Wholesale sales transactions may only be made to active permit holders or a manufacturer of non-beverage food products that has been issued an exemption letter from the DLC.

Agents are prohibited from selling beer, wine, or mixed beverages to any retail permit holder.

An Agent may not sell spirituous liquor at retail to any wholesale permit holder for resale for on-premise consumption.

Transient wholesale sales transactions allow permit holders to purchase inventory sold at wholesale sales prices from an Agency other than the assigned Agency if proper permit

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verification is provided. Transient wholesale sales transactions are to be used for F Class permit holders and permit holders unable to purchase a specific product from their assigned Agency. It is imperative that the permit number and doing business as (dba) name is recorded as part of the wholesale sales transaction.

An Agent and its employees may deliver spirituous liquor to permit holders authorized to sell spirituous liquor for on-premises consumption as long as it is paid for before delivery. All orders must be invoiced immediately upon being picked up or delivered. Agents are prohibited from accepting credit cards for the wholesale purchase of spirituous liquor.

Wholesale customers are not permitted to return spirituous liquor for any reason, without prior authorization from the DLC.

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4.0 Operational Procedures

Each Agency is provided with a minimum of one radio frequency scanner (RF Scanner) to complete operational tasks. Job aids on using the RF Scanner to complete these tasks can be found in the training section on the OPS.OHLQ Website.

The DLC requires the Agent and its employees to complete the below tasks. Failure to complete any of the required tasks is a violation of the Agency Agreements.

4.1 Inventory Cycle Counts

Inventory cycle counts are mandatory, and all of the inventory is to be cycle counted by the Agent or its employees in accordance with DLC directives. Agent and its employees must count every product in its Agency store and record the results in the IMS by use of the RF Scanner. Any variances between the amount of the product physically counted versus the quantity noted in the IMS are to be recounted and verified prior to posting the final results of the cycle counts to the IMS. Inventory cycle counts must be posted to the IMS at a time in which the Agency is not accepting sales transactions (i.e. closed for business).

4.2 Inventory Adjustments

Inventory Adjustments (IA) are required to be completed through use of the RF Scanner at the time of discovery. An IA may include:

• Customer breakage

• Short shipments

• Delivery driver breakage or breakage upon arrival at Agency location

• Previously unknown breakage noted when opening a case

• Manufacturer defects that render the product unsaleable

Breakage by an Agency employee or theft is not an allowable IA. This loss should be accounted for via an inventory cycle count.

Two copies of the IA form must be printed after completing the IA in the RF Scanner. The IA forms must be signed by the appropriate parties. The appropriate parties may include either the truck driver or customer, and the Agent or its employee completing the IA. One copy of the IA form should be retained in the IA file. All proof of breakage must also be retained for verification by the DLC which could include the case, bottle and a minimum of the bottle neck from breakage.

An IA that has not been completed accurately or timely will not be approved by the DLC and financial responsibility for the IA will be assigned to the Agent. See Section 4.5, Posting, for additional information on IAs.

4.3 Transfer Orders

A Transfer Order (TO) is the weekly or bi-weekly replenishment order of spirituous liquor inventory for an Agency. An Agent will receive a DLC-generated TO via the IMS based on calculated minimums, sales history, and current on-hand inventory. The TO can be edited by the Agent, during the allowed timeframe, to account for demand, or a lack thereof, not captured on the DLC-generated order or reduce the quantity of the DLC-generated order unless otherwise directed. Once the Agent has submitted the TO to the DLC, the DLC will review and make all changes determined to be necessary. The DLC will send the approved TO to the assigned distribution

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center (DC). The DC will receive the approved TO and schedule the delivery of product listed on the Agent’s approved TO.

To prevent requested order increases from being cut, such as for a special event creating additional need, the Agent must contact the LESC prior to submitting the TO to the DLC. The following information must be provided when contacting the LESC:

• Brand

• Quantity

• Justification

Agencies must provide the justification for each requested increase in brand with increased quantity, not a single justification for all brands that were increased.

Job aids that outline the procedures for accurately completing the TO process are available electronically on the OPS.OHLQ Website under the Training tab.

4.3.1 Weekly or Bi-weekly Transfer Orders

The DLC assigns a delivery date to restock the Agency on a weekly or bi-weekly basis based on average case delivery count. This schedule may be adjusted as needed per DC request, holidays, or at the direction of JOBS in coordination with DLC. Any change to an Agency’s assigned order or delivery day will be communicated via electronic mail and posted on the OPS.OHLQ Website. The standard Transfer Order Process Schedule is as follows (Table 2):

Transfer Order Available Delivery Date

Monday Thursday

Tuesday Friday

Wednesday Monday

Thursday Tuesday

Friday Wednesday

Table 2 - Transfer Order Process Schedule

4.3.2 Agency-to-Agency Transfer Orders

Agency-to-Agency Transfer Orders may be requested by the DLC, representatives of manufacturers of spirituous liquor (Vendor/Broker), or Agent. Any request to transfer product to another Agency will be reviewed with the receiving Agency. Procedures for shipping and/or receiving Agency-to-Agency Transfer Orders must be completed according to the approved process, which can be found on the OPS.OHLQ Website under the Training tab. Only a DLC representative or Vendor/Broker may facilitate the transfer of product. The transfer of spirituous liquor may occur only if it is approved by the DLC and the associated TO is viewable in the IMS.

4.3.3 Minimums and Restricted Product Status

The DLC will set minimum inventory levels on each product for the Agency based on a formula derived from sales history and projected sales growth. Minimums will be updated as necessary to ensure adequate inventory levels. An Agent will not be able to set its own minimums.

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Restricted status is assigned by the DLC to products not authorized to be ordered by an Agency. Requests to remove the restricted status must be approved by the DLC after consultation with Vendor/Broker. An Agent must submit its request to the LESC and provide the following details:

• Agency number • State brand code of the restricted product • Justification for the requested product

If the request is approved, the Agent will have the ability to include the product on a future order. If the request is not approved, the Agent will be notified via the LESC Ticket Resolution Process (See Section 9.0).

4.4 Receiving

The Agent and its employees shall receive spirituous liquor from the JOBS-contracted freight carrier and shall securely store the spirituous liquor in their Agency. All deliveries of spirituous liquor are tailgate delivery and shall be transferred into the Agency premises by the Agent or its employees. Agents are required to have adequate staff capable of unloading deliveries at a rate of 200 cases per hour. Agent and its employees must receive product utilizing the RF Scanner so that the IMS is updated accurately. A delivery window will be communicated to the Agent for each delivery and the Agent or its employees must be present for the entire duration of the communicated delivery window and be prepared for immediate unloading. The delivery window will be communicated on the OPS.OHLQ Website or by text message. If the incoming product cannot be received with the RF Scanner, the delivery must be received manually, and the LESC must be contacted immediately to report the issue.

An Agent is required to maintain safe unloading conditions for the delivery driver including a level docking area, an environment free from obvious hazards, and unobstructed pathways. The JOBS-contracted delivery drivers have been instructed to remain onsite until the entire delivery process is complete, including the completion of all necessary paperwork.

4.5 Posting

The RF Scanner must be utilized for scanning each case unloaded into the Agency. This will allow all product received to post automatically into the IMS. Proper procedures for using the RF Scanner to complete the task must be followed. Job aids on how to perform this activity can be found electronically on the OPS.OHLQ Website under the Training tab.

Additionally, all IAs must be recorded at the time of delivery via the RF Scanner. The IA Form must be completed and signed by the delivery driver and the Agent or its employee. If an IA is not recorded at the time of delivery, and all necessary paperwork completed, the Agent may be required to assume financial responsibility for any delivery discrepancies (see Section 4.2).

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5.0 Training

Training is required to be completed as instructed by the DLC. All Agency employees responsible for selling or stocking spirituous liquor must be given proper training and have access to the training material provided by the DLC.

5.1 Alcohol Education and Certification

Each Agent, and each Agent’s employee, conducting the sale of a spirituous liquor item is required to complete the DLC’s Alcohol Education and Certification Program. This program is designed to assist an Agent and an Agent’s employees in the safe and responsible sale of spirituous liquor. The cost of this training will be at the Agent’s sole expense.

The Investigative Services Section within the DLC conducts the initial training with new Agency owners and their employees, as well as any retraining required for those Agencies that have been found to be in violation of Ohio laws. Documentation of the initial training, and any required retraining, will be maintained by the DLC.

Following the initial training, and within sixty (60) days of employment at an Agency, each new employee that will be conducting the sale of spirituous liquor is required to attend and complete, at the Agent’s expense, an Agency alcohol server education and certification training program offered by a third-party provider. The Agent must retain all records associated with third-party provider training for Agency employees until a minimum of (60) days after the employee is no longer employed at the Agency.

Ongoing continuing education for the continued sale of spirituous liquor may be required at the discretion of the DLC.

5.2 IMS Training

The DLC will provide IMS training to all new Agents. All expenses incurred for training, such as travel, insurance, and salary will be borne by the Agent. Training materials providing step-by-step instructions on completing required DLC processes at an Agency will be provided to the Agent by the DLC. The training materials include, but are not limited to:

• Accessing and operating the IMS • Use of the OPS.OHLQ Website • Ordering and receiving spirituous liquor • Reporting daily sales • Using the RF Scanner • Transacting wholesale sales (if applicable) • Conducting cycle counts • Entering IAs

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6.0 Technology Requirements

In addition to the IMS provided by the DLC, Agencies are required to maintain, at all times throughout the Term of the Agency Agreements, the following technology which is necessary to successfully conduct Agency operations, report sales, and access/operate the DLC IMS:

• A DLC approved POS System

• A computer with an up-to-date operating system, the latest web browser, security patches, updates, and drivers that allow an Agency to access and operate the IMS

• A printer, paper, and ink or toner to print reports

• Portable document format (PDF) rendering software installed on the Agent’s computer

• Broadband Internet with adequate capacity to operate the IMS

• An Agency specific email address

The following technology is recommended to enhance the abilities of an Agency to perform successfully, but are not required:

• Microsoft Office 365—Including Microsoft Excel and Word

• Antivirus software

• A cellular telephone capable of receiving text messages

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7.0 Performance Metrics

All Agencies are subject to two (2) physical inventory counts performed by DLC representatives per calendar year. Additionally, there will be a minimum of four (4) compliance visits by DLC representatives per calendar year.

7.1 Compliance Visits

Representatives of the DLC will make periodic examinations of an Agency to ensure that correct operating procedures and Agency standards are being executed regarding, but not limited to:

• General Appearance • Sales and Inventory Maintenance • Inventory Control • Paperwork Retention

Any procedural finding against the Agent may result in DLC action, including but not limited to the following:

• Written warning letter from the DLC • Placing the Agency on a Performance Improvement Plan • Suspension or termination of sales privileges • Transfer of wholesale account customers • Suspension or termination of the DLC agreement and JOBS agreement

During compliance visits, a DLC representative will review whether an Agency is meeting the criteria based on DLC and JOBS standards. Representatives will review the performance of the Agency based on the following criteria. These criteria include 25 total questions, and each represents approximately 4% of the score:

• General Appearance: o Is the general appearance of site exterior in good condition free of trash, debris

and damage? o Is the parking lot in good repair? (No potholes, damaged signs, etc) o Is the Agency emblem on the front of the store? o Is there an unobstructed view of the Retail Liquor sales area? o Are the floors swept, trash disposed, and no visible stains in the sales areas?

Storage room? o Are the interior walls, floors, shelving, ceiling in good condition in the sales areas?

(free of damage, dust, dirt, product displacement) o Are the registers, computer, and printer in good working order?

• Sales and Inventory Maintenance o Are sales reported daily? o Does the agent separate high proof and low proof spirits on the shelves? o Is the Spirituous Liquor organized in the sales area by brand/type? o Does the number of Vendor displays meet Agency standards? (20 max) o Are accurate prices/sales displayed on shelves? o Are inventory cycle counts completed at the rate required by the DLC? o Are the Agencies Alcohol Education and Certification Program certifications on

file?

• Safety and Security of Product o Is the Spirituous Liquor stored in a secured cage/backroom? o Is there controlled access to the Liquor Storage area?

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o Are there electronic/mechanical security device(s) or security personnel? o Are the inventory levels manageable? (Answered based on 5 items counted on the

Retail floor and storage area, and compared to the on-hand inventory figures)

• Paperwork Retention o Are the liquor files organized with past Audits? o Is inventory adjustment paperwork complete and on file? o Are wholesale permit customers and receipts documented? o Are the liquor files organized with past compliance visits? o Are inventory adjustments completed timely and accurately? o Is customer breakage properly documented? o Are trucking signatures obtained?

Each of these topics will be reviewed for an answer of “yes” or “no” by the DLC Representative and assigned a point value and total percent. The DLC Representative will indicate the numerical value of criteria met, where each score will be compared to the scoring criteria identified below in Section 7.2.

Immediately following the calculation of scores, the DLC Representative will review the findings with the authorized Agency Representative. A Performance Improvement Plan will be initiated for any negative findings.

The Performance Improvement Plan will consist of an acknowledged agreement between the authorized Agency Representative and the DLC Representative to correct any area of violations. The DLC Representative will identify an area where a violation occurred such as missing Wholesale customer permits or missing a particular file type. The DLC Representative, in consultation with the Agency Representative, will assign a date of completion to correct the violations. Once signed, the Performance Improvement Plan will be sent to the LESC for documentation purposes, as well as to the Inventory Control Manager for monitoring purposes.

7.2 Results

Agents are expected to have scores (total number of “yes” answers to the review criteria identified in Section 7.1) that total between 20 to 25 which translates into a percentage of 80-100 percent for each compliance visit to meet or exceed DLC and JOBS performance expectations. Each of the questions equate to 4 % of the final score. Immediate action will be taken for any Agent that has a score below 20 (or 80%). The following score guidelines will be followed:

• A score of 23 – 25 (92-100%) is considered to be at or above standards, and a DLC representative will return in 60-89 days for the next compliance visit.

• A score of 20-22 (80-88) is considered to meet the standard criteria. A DLC representative will return in 30-60 days for the next compliance visit.

• A score of 19 or below (76% or below) is considered to be below standard criteria. Agencies that are considered failing are required to receive a Performance Improvement Plan. A DLC representative will return in 14-28 days for the next compliance visit. All Agencies with scores in this range will be contacted by a DLC Inventory Control Manager to evaluate the Agency’s Performance Improvement progress against the established Performance Improvement plan.

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7.3 Contract Liquor Agency Compliance Progression

The following table represents an Agency’s compliance progression.

Prior Violations Status 1 Status 2 Status 3 Status 4

None Compliance Visit Failure or DLC instruction (Auditor direct)

Performance Improvement Plan provided

Counseling and Verbal Warning

Performance Improvement Plan, if required

Written warning letter from DLC

Contract Review Step 1

Compliance Visit Failure or DLC instruction

Counseling and Verbal Warning

Performance Improvement Plan, if required

Written warning letter from DLC

Contract Review Step 1

Contract Review Step 2

Counseling and Verbal Warning

Written warning letter from DLC

Contract Review Step 1

Contract Review Step 2

Contract Review Step 3

Written warning letter from DLC

Contract Review Step 1

Contract Review Step 2

Contract Review Step 3

Contract Review Step 1

Contract Review Step 2

Contract Review Step 3

Contract Review Step 2

Contract Review Step 3

Table 3 - Compliance Progression

Each Agency will receive an annual scorecard that summarizes the Agency compliance visits based on the criteria identified above.

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8.0 OHLQ Website

The DLC and JOBS have developed the OHLQ Website as a consumer facing website and an Agency useable site via www.OPS.OHLQ.com to provide additional reporting tools. Agents are required to maintain accurate inventory counts via the inventory cycle count process (see Section 4.1) to ensure the consumer facing website accuracy is maintained. Additionally, each Agent is required to maintain accurate store contact information and operational hours on their Agency-specific pages on the OPS.OHLQ Website.

The OPS.OHLQ Website is the repository for all Agency training materials. These materials update frequently, so Agents are encouraged to review this data at least once per quarter of the calendar year.

The OHLQ Website and the Agency specific pages found under OPS.OHLQ is an ever-evolving website, and future updates are anticipated. The email address listed for each Agency will receive updates via DLC communications, along with directions on how to use the updates.

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9.0 Contact Us

The LESC was created to assist with inquiries related to the operation of the Liquor Enterprise and serves as one central source for information and issue resolution. The LESC is:

• Available for calls 24 hours a day, 7 days a week

• Committed to customer service

• Responsible for receiving Agency operations inquiries and assigning, tracking, and reporting on all inquiries

• Monitored by the DLC at the highest levels

Please contact the LESC with all inquiries:

• Email: liquorAgencyhelp@com.state.oh.us

• Phone: 877-812-0013

The LESC will document all inquiries and assign a ticket to the responsible party for resolution. The ticket is tracked by the DLC until the issue is resolved (the LESC Ticket Resolution Process). The Agent may receive notification of resolution via email.