Market Rules and Procedures
Although risk management tools such as insurance and governance are excellent for resolving problems after they occur, farmers markets are in the best possible position when problems don’t happen in the first place. Here are a few examples of how market rules and procedures can prevent problems before they start:
- Keep people safe by making sure all vendors adhere to specific safety standards.
- Prevent disagreements by making clear how products may or may not be displayed.
- Prevent vehicle accidents and ensure smooth set up and take down by creating efficient procedures.
- Manage disagreements by outlining grievance procedures if issues develop.
Whether talking about safety risks, the risk of violating laws and regulations, or the risks inherent to managing relationships with vendors and site hosts, rules and procedures put the market in a strong legal position. For example, farmers markets that are proactive about creating a safe environment are less likely to be found negligent by a court. With safety procedures in place and evidence that those procedures are followed, the farmers market is in a better position to defend itself. Additionally, clear rules and procedures can show that the farmers market measures all vendors and circumstances against clear, defined benchmarks. This helps the market prove that decisions are made on a level playing field, should the market have to defend itself against a discrimination claim.
The risk management benefits of rules and procedures extend beyond the chance of a lawsuit. When farmers markets can demonstrate their standards, they might qualify for better insurance rates. They may have more bargaining power with landlords, vendors, or site hosts. Farmers markets might be able to negotiate lower lease rates, attract higher quality vendors, and maintain good working relationships with hosts and partners.
One best practice market procedure is to institute an annual legal check-up at a specified time each year. In the check-up, the market leaders review business filings and insurance updates that need to be made, and they review agreements with their host site, as well as internal market documents and practices. For markets participating in SNAP, the annual check-up is also a good time to ensure compliance with the program. Here is a sample annual legal check-up for markets.
For an example of how one North Carolina farmers market developed its market rules, read the Durham Farmers Market case study.What kind of risks do Market Rules and Procedures help manage?
Best Practices and Important Market-specific Rules and Procedures For Farmers Markets
- General Best Practices
- Market Day Safety Checklist
- Market Rules
- Vendor Eligibility and Applications
- Vendor Rules & Agreements
- Dispute Resolution Processes
Market Rules and Procedures Best Practices
Overall, three key best practices will help farmers market businesses and organizations develop strong rules and procedures: transparency, consistency, and discretion.
Being transparent in advance about how vendor selection is made, when it is made, and how the results are communicated generally has a positive effect on relationships and on legal risk management. When people understand a process, they are more likely to accept the result. When the result is opaque, people become defensive, and defensiveness can be very hard to negotiate with. Even if everyone doesn’t agree on the criteria for a decision, knowing the criteria can prevent problems before they start.
Consistency is essential if rules and procedures are to be effective as a legal risk management strategy. In some situations, a business or organization is worse off if it has detailed rules and procedures but doesn’t apply the rules consistently to all people than if it has no rules at all. If a business or organization can’t commit to consistently and regularly following a rule or procedure, perhaps that rule or procedure shouldn’t exist. Inconsistent enforcement is an open invitation to a discrimination lawsuit. If a rule or criterion is enforced for one person but not for another, people begin looking for reasons for that treatment, such as discrimination.
Farmers markets also need to preserve their ability to make decisions without being forced through an overly rigid process that may not account for individual factors and circumstances. This is often called preserving discretion. Without taking away from the role of transparency and consistency in legal risk management, preserving discretion is just as important. In any list of criteria and in any application, farmers markets should include a statement that the decision is ultimately at the discretion of the farmers market owner, manager, team, board, or other decision-maker, as appropriate.
This doesn’t necessarily resolve the risk of disagreement (legal or otherwise), but it does remind applicants that the farmers market has the final say in any decision made. These statements do not have to be long or elaborate. This simple statement might work for most circumstances: “The farmers market retains the right to use its discretion in interpreting eligibility criteria and approving any vendor application.”
Safety checklists are good risk management
Farmers markets that are proactive about creating a safe environment and that avoid common risks of injury and damage are in a strong legal position. Good safety procedures and evidence that those procedures are followed help the farmers market defend against claims of negligence, should that become necessary.
Markets can create and use market-day safety checklists to achieve this risk management goal. These are lists that market personnel can follow during a routine, pre-market walk-through to confirm that specified market conditions are met.
For example, these checklists might prompt the user to ensure that:
- signs and/or hazard cones clearly mark entrance and exit areas;
- electrical cords are covered to prevent tripping;
- hand-wash stations are set up, where required;
- food is stored in appropriate locations; and
- emergency access is not obstructed.
For a sample market day safety checklist, click here.
For peer examples of market-day safety checklists, click below:
- FreshConnect Farmers Market (New York) Safety Checklist
- California Certified Farmers Market Guidelines (developed by UC Davis) Safety Checklist
- Model Safety Checklist developed by Stanford Law Professor Jay Mitchell (this document originally appeared at https://nonprofitdocuments.law.stanford.edu/. It appears here with permission of Stanford Law School.)
Writing a safety checklist
Market-day safety checklists should be tailored to the market’s unique location, set up, circumstances, and safety concerns. That said, in developing a checklist template, consider including the following features:
- Space for the market personnel conducting the walk-through to fill in his/her name, the date and time, and a check for each inspection item as it’s inspected (or otherwise indicate that a standard is satisfied/not satisfied).
- For the convenience of the individual conducting the safety walk-through, organize the safety checklist in logical order with regard to market layout.
- A column to one side of the list (and checkboxes) for notes or needed follow up regarding specific list items.
- Space below the checklist for notes or needed follow up.
Drafting Market Rules
How do markets make the most of their market rules, particularly as risk management tools? What should market rules include? What format should they be in? For market leaders and attorneys interested in addressing these crucial questions, please read, download, and share the article below.
Jay A. Mitchell is a professor of law and director of the Organizations and Transaction Clinic (OTC) at Stanford Law School. The OTC represents established nonprofit corporations on governance, structural, contractual, and other matters. Notably, it has represented numerous farmers markets, including helping them develop and refine market rules. In the following article, Prof. Mitchell makes suggestions regarding market rules’ design and content. This guidance is meant for markets refining existing rules or drafting rules from scratch. The article was originally published in the Journal of Food Law & Policy at 13 J. Food Law & Pol'y 181 (2017). It appears here with permission of the Journal.
Vendor Eligibility and Applications
Prevent or minimize conflicts with clear eligibility criteria.
A legally resilient vendor application will collect the information necessary to assess the applicant according to vendor eligibility criteria.
When a farmers market is clear about the eligibility criteria it utilizes, it’s in a better position to defend decisions made on that basis. Further, when the application materials reflect the eligibility criteria (no more, no less), the market’s position is even stronger. In addition, solid criteria and a concise application help prospective vendors anticipate whether a market is a good fit for them. This helps save time for applicants and vendors, as ineligible applicants are less likely to apply.
Farmers markets might consider drafting a mission or vision statement to inform vendor eligibility criteria and applications. Although mission statements won’t necessarily have a legal role in the event of a lawsuit, they can create transparency for market managers, as well as help determine what the eligibility criteria should be. Mission or vision statements can also make it easier for market leaders to explain the reasons for adopting eligibility criteria to vendors and others.
The following examples indicate how various farmers markets have achieved the goal of clear vendor eligibility criteria. The following section with examples of vendor applications show, further, how eligibility criteria can be integrated into the whole application package.
Peer examples of vendor eligibility criteria
Below are three vendor eligibility clauses that differ in style and focus.
This example is useful because it lays out five categories of products that vendors may sell at the market. Each category is defined and has distinct requirements that vendors must follow. Including definitions is especially useful because it isn’t always clear whether a product such as dried fruit is a raw product or a value-added product, for example.
Click here to view this example.
To visit the Seattle Neighborhood Farmers Markets website, click here.
Rather than focusing on the types of products a vendor sells, this market selects vendors based on intangible factors such as quality and customer service history. These selection criteria are made more specific by a clear ranking. The handbook makes clear that quality is the most important factor with location second. It also indicates that although incubating businesses is important to the market, its own viability comes first. These priority statements will help a potential vendor assess his or her qualifications and enable the market management to explain approvals or denials to vendors.
Click here to view this example.
To visit Salmon Creek Farmer's Market website, click here.
This is an example of a very concise set of criteria. Although they may not provide much guidance to prospective vendors or market staff making selection decisions, they do set minimum qualifications.
Union Square Farmers Market Policies 2015 Season
Applicants will be received from:
- Massachusetts Farms selling products from their farm.
- Massachusetts Specialty Food Manufacturers selling products created by their own business, with priority giving to those using ingredients from their own farm.
- Massachusetts Wineries selling wine created by their own business, with priority to those using ingredients from their own farm.
- Non-Profit and Community Organizations wishing to provide information and outreach of benefit to Union Square residents.
To view this example in further detail, click here and scroll to page 8.
A legally resilient vendor application will collect the information necessary to assess the applicant according to vendor eligibility criteria. That being said, a vendor application can also create efficiency and improve communication by including a few other elements, which are discussed in more detail below:
Vendor selection criteria
Statement about vendor selection appeals processes
Additional information about fees or other required supplemental materials.
Including the vendor selection criteria right in the application can be helpful as a reminder to applicants. It helps applicants understand how to best present their business for success, as well. Including market rules and select questions relevant to those rules is also helpful. Screening out vendor applicants who cannot follow the market’s rules may help avoid disappointment if the rules are introduced at a later point. In addition, farmers markets might consider including a full list of all market rules as part of the application packet. Many markets will choose to ask for a vendor’s commitment to abide by the rules at the time the application is taken, rather than after the vendor is admitted. Neither approach is necessarily more legally sound—the choice depends on the market’s preferences.
To create the maximum in transparency and efficiency, many markets may choose to describe the appeals process in the event that an applicant disagrees with a vendor selection decision. Although it may seem like more information than is really necessary, transparency is generally in the farmers market’s interest. Letting potential vendors know an appeals process exists can help them feel more respected and heard at the outset.
Farmers market vendor applications often require a fee. Legally speaking, the application should clearly state whether the fee is refundable, refund procedures (if relevant), and acceptable forms of payment.
Some markets may wish to collect additional information such as gross sales, number of employees retained, acres of farmland utilized, etc. This additional information can help the market better understand its vendors, compete for grants, boost its nonprofit status, and explain the market’s importance to the community. Legally speaking, if this information isn’t directly related to a criterion for admission, it may not be appropriate for a vendor application. Market leadership can still collect information through a survey, but the survey should come after all vendors are admitted, based on eligibility criteria only.
There are a variety of vendor applications that require different types of information. An application packet might contain a form to collect potential vendor information and an outline of the admissions procedures. Ideally, the packet creates a consistent process by which to assess each potential vendor. An application packet might request information such as:
- the vendor’s contact and location information;
- products sold; and
- other markets and sales outlets utilized.
Peer Example of a Vendor Application
This application is a shining example of a strong application. It starts by listing the vendor eligibility criteria and rules. Then, for every application question, it directly offers the rule or criterion that is the basis for the question. This helps vendors assess their potential for success while protecting the market from claims of discrimination. The application also clearly states the market’s appeals process and fee obligations.
Click here to view this example.
Rules for market vendors often clarify expectations and allowed or disallowed actions. For example, vendor rules can set out:
- insurance recommendations or requirements;
- recommended or required tables, tents, supports, and other set-up considerations;
- prohibited or encouraged vendor marketing and communication tactics;
- products and items allowed or disallowed for sale;
- discipline and termination processes if a rule is violated; and
- safety and emergency procedures.
In addition to writing vendor rules and agreements, markets should ensure that rules and expectations are communicated to vendors on a regular basis. Here is a sample annual market-vendor communication checklist to get you started.
Farmers markets may consider requiring vendors to indemnify the farmers market. If a vendor indemnifies the farmers market, the vendor agrees to pay the farmers market back for any damage the vendor causes for the farmers market. A simple indemnification agreement is not hard to write, but it can be difficult to understand exactly what it does and does not do for both parties. Farmers markets should work with an attorney to write such a clause. Many farmers markets use standard “hold harmless,” “indemnification,” or “waiver of liability” agreements. These agreements may not be enforceable in court or may be very limited in their application. Again, farmers markets should work with an attorney who can examine exactly what the market does, who vends at the market, and which risks may be waived or indemnified in the state where the farmers market operates. This is the only way to create a vendor agreement that will be enforceable in court in waiving any of the obligations a farmers market owes to vendors, customers, landowners, or others.
For more information about vendor agreements and records showing vendor compliance, visit the Recordkeeping section here.
Dispute Resolution Processes
Vendor-Vendor Dispute Resolution
Manage conflicts that arise between vendors at the market by having a system to receive and manage disputes.
Market-Vendor Dispute Resolution
Manage conflicts that arise between vendors and the market managers through an objective process for receiving and resolving the disputes.
Vendor-Vendor Dispute Resolution
By and large, when vendors run into problems with each other, it’s because one vendor feels another is not complying with the farmers market’s rules. For example:
- One vendor questions whether another vendor’s product is grown in a manner or location required by the market.
- One vendor asserts that another vendor’s sales, marketing, or communication tactics violate market rules for acceptable conduct.
- One vendor is upset at another vendor’s display, vehicle, or other space-related concerns.
Managing these vendor disputes is primarily a matter of creating a system to verify if a vendor is in fact complying with the rule. For convenience’s sake, this is often called a dispute resolution process. In the occasional case where a vendor is upset with another vendor and there is no rule defining the appropriate course of action, a dispute resolution process can be adapted to address the questionable behavior.
Example dispute resolution process
There are many ways in which to orchestrate a dispute resolution process for conflicts between vendors. That said, many markets’ dispute resolution processes consist of these general steps:
- submission of a written complaint;
- evaluation of the complaint and action steps proposed;
- an opportunity for a vendor to appeal an outcome;
- transparency of this overall dispute resolution process, and the opportunity for vendors to participate in improving it.
Submission of a written complaint
The market may permit vendors to initiate the dispute resolution process by submitting a written complaint/concern about another vendor. Many markets have a different form depending on whether the complaint is about product sourcing or about another rule. If one particular type of complaint is most common, it can be helpful to create a specific form for the particulars of that issue.
To initiate a quick resolution, many farmers markets will choose to set a time limit on when a complaint may be submitted after the incident occurs or behavior begins. Naturally, the complaint form generally asks vendors to submit specific facts to support the complaint/concern. It can be very helpful to also ask vendors to cite a specific market rule or criterion. This can help the farmers market identify whether a vendor simply doesn’t like the behavior, or whether a rule is in question. Lastly, some markets request a filing fee that is later returned if the product challenge is verified. This can help ensure that complaints are made in good faith.
Explore these sample forms for complaints and concerns from the Portland Farmers Market in Oregon.
Evaluation of the complaint and action steps proposed
Of course, if a market has a process for accepting complaints, it needs a process for evaluating complaints! Generally, this is as simple as the manager inquiring with the vendor who is the subject of the complaint. Depending on the rule being violated, the manager may request specific documentation. For example, if the source of a product is being challenged, the dispute resolution procedure may require that the vendor in question submit photo evidence of the source of the product (a field where grown, a shop where created, etc). Or, the market manager may investigate the vendor in question about the behavior at the next market (for example, examining where the vendor parks or measuring the size of a display, as the case may be). The evaluation process may describe specific action steps that the market manager will request. For example, if a product’s source cannot be proven/disproven, then the vendor will be allowed to sell it. Or, if the vendor is parking in the wrong place or violating display rules, the vendor may be requested to change it immediately or at the next market event, depending. Generally, dispute resolution processes give wide discretion to the market manager to evaluate a complaint and create action steps to resolve it.
Process for appealing the complaint/concern
A vendor might be dissatisfied with the outcome of a market decision. To provide the vendor further (non-litigation) options for addressing their dissatisfaction with the outcome, a market may provide an opportunity for the vendor to appeal a market decision. Markets providing this opportunity will usually set a strict time limit on how long the accused vendor has to appeal and will require the appeal to be in writing. Where possible, the appeals process is most useful if the business or organization can provide a neutral third party (such as a professional mediator) to hear the appeal and render a decision. Generally, the mediator (or other third party) follows the same evaluation process as the market manager, which may give the third party wide discretion as well.
Maintaining transparency and improving processes
A market may consider encouraging suggestions from vendors to improve the dispute resolution process at the conclusion of any process. By encouraging vendors to air final complaints or thoughts, the market may diffuse any remaining tension. This can go a long way in achieving final resolution, no matter the actual outcome.
Peer Example of Vendor-Vendor Dispute Resolution Process
Here, the market sets out effective protocols for grievances and product challenges by providing a standard form for both processes. The protocols are clearly divided into two distinct sections with numbered, step-by-step instructions.
Click here to view this example and scroll to the bottom section "Protocols for Vendor Grievances and Product Challenges."
Market-Vendor Dispute Resolution
Occasionally, vendors may have problems with the market decision maker. For example:
- A vendor may claim that the market unfairly removed or ejected the vendor.
- A vendor may feel the market is enforcing rules inconsistently or only against specific vendors.
- A vendor may not like a stall assignment.
The first and most important way to handle these issues is to prevent them. Clear rules and procedures alongside clear processes for determining vendor compliance with rules can prevent complaints about stall assignments or ejection of a vendor, for example. But, where the complaint is about the manager’s interpretation or consistency enforcing the rules, clear rules and procedures won’t necessarily help. When vendors have a grievance with the decision maker, they will generally want a third party to review the grievance. Although many nonprofits have boards that can serve this role, farmers markets that are private businesses do not. Private businesses may be reticent to pay for or provide a third party to hear a complaint about the way they are running their own business. Yet, it can be a wise choice to foster long-term positive relationships with vendors.
Model dispute resolution process
Farmers markets should consider the following elements of a dispute resolution process involving a decision made by the market decision maker.
- Emphasizing the market’s discretionary power. The market should affirm its ability to take appropriate action when a vendor violates the market rules or fails to comply with other policies. A discretionary statement gives the market flexibility to address vendor issues in the light most favorable for the whole market.
- Delegate resolution to a third party. A third party might be a nonprofit board of directors, the executive director of a farmers market advocacy organization, or a selected team of stakeholders. Where markets put a team together, they generally allow each person (the decision maker and the aggrieved vender, in this case) to appoint one team member and then those two team members appoint a third. Then, the panel of three hears the complaint. Generally, the resolution process follows the same procedure as does the original complaint. The new third-party reviews the facts and the decision originally made, and then proposes an action plan to resolve it. The action plan may stick with the market decision maker’s original conclusion or may modify it.
Peer example of market-vendor dispute resolution process
Selection from City of Ann Arbor Public Market Operating Rules (pg. 8):
- Appeal Procedure
A vendor, vendor applicant, or market customer aggrieved by a decision of the Market Manager interpreting or enforcing the Market Rules may appeal to the Community Services Administrator or his/her designee using the following procedure:
- The aggrieved party shall submit in writing to the Community Services Administrator or his/her designee a written description of the decision of the Market Manager being appealed and the facts and circumstances resulting in the Market Manager’s decision.
- The appeal must be filed with the Community Services Administrator or his/her designee within 14 days of the date of the Market Manager’s decision.
- The Community Services Administrator or his/her designee shall review the information submitted and shall provide a written decision within 45 days.
- The decision of the Community Services Administrator or his/her designee shall be final.
- During appeals, vendors may continue to sell at the Market at the discretion of the Market Manager.