Buying a Restaurant or Bar and the Transfer of Liquor License

On September 8, 2011, in Business Sales Process, How to Buy, Restaurants, by Mina Singson

When we list a restaurant or bar for sale with Alcoholic Beverage Control (ABC) license, we generally get significant buyer activities on them.  For buyers of such businesses who do not understand how a liquor license is transferred, here is an overview. The number of retail liquor licenses, especially Type 47 (full liquor license for [...]

When we list a restaurant or bar for sale with Alcoholic Beverage Control (ABC) license, we generally get significant buyer activities on them.  For buyers of such businesses who do not understand how a liquor license is transferred, here is an overview.

The number of retail liquor licenses, especially Type 47 (full liquor license for restaurants) and Type 48 (full liquor license for bars and nightclubs) that can be issued in a county is restricted.  The limited supply of liquor licenses and the lengthy process to get an ABC license approved make businesses with permit to sell alcohol highly desirable and valuable.

When buying a business with beer and wine or full liquor license, the transfer of ABC license from one person or entity to another person or entity is called a “person-to-person” transfer.

Generally, this is how it works:

When an offer is accepted, the buyer and seller must open an escrow account before the application for transfer is filed with the ABC. The escrow company will file a notice of intended transfer with the office of the county recorder for the county where the licensed establishment is located.  Next, the buyer and seller will fill out the transfer application form with the information of the seller and the buyer and all of the required business information regarding the business entity requesting the liquor license transfer.

Immediately after filing an application, a public notice of application for ownership change must be posted on the premises for 30 days. The escrow company will also publish a notice of the application in a newspaper of general circulation in the area in which the business is located.

If all goes well until the posting period ends, at this point, the buyer must deposit the remaining balance of the purchase price with the escrow holder and close escrow.  The escrow company forwards an ABC form to the local ABC district office to declare that purchase consideration and contingencies have all been completed. When the license is transferred, the ABC returns the counter-signed form to the escrow agent as a signal that the consideration in the escrow can be released to the seller.

This transfer procedure takes at least 60 days and each process may vary depending on both parties’ situations.

For more information on the sale of restaurants or bars with alcohol license, contact Restaurant Business Broker Mina Singson at 310-882-2200 x 125 or email msingson@bizex.net

References:

www.abc.ca.gov

 

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