BizBen.com
500 New & Refreshed Posts, Postings Daily
Over 8,000 Postings & 2,500 Resources
Assisting Buyers & Sellers Over 25 Years!


Liquor License

Tags: escrow bulk sales, legislation, liquor license

Comments & Replies: 4     Views:     Post ID:     Comments About This Glossary Term

Liquor License, In order to sell liquor in the State of California, a license obtained from the California Department of Alcoholic Beverage Control (ABC). In most cases the license is transferrable. However, the filing is still a requirement when transferring a business that sells liquor.

Contributor: Transactional Attorney
While the term "liquor license" is frequently generically used to describe the state license required to operate a business which sells alcoholic beverages, there are many different categories of liquor license depending on the type of business and how and where it transacts its sales.



Simply because a Seller is operating their business in a certain way currently does not ensure that they are complying with the provisions of the liquor license they hold. A Buyer purchasing a business which sells alcohol must clearly understand the nature of the existing license as well as the process required to transfer that license to a new owner.



License transfer procedures vary from state to state. In California, for example, they must be done through the California Board of Alcoholic Beverage Control (ABC) and typically take at least 55-65 days, but can potentially take much longer. If you are buying a California business involving a liquor license transfer it is important not to assume that your transfer will be approved within the 55-65 day range. Business transactions involving the transfer of a liquor license must go through escrow, and an escrow company experienced in working with liquor license transfers is an invaluable resource during the process.

This is a license issued by a state, a county, or a municipal government (depending on the state) allowing a merchant to sell "alcoholic spirits." The types, scopes, limitations, and requirements of a liquor license vary widely from state to state, and often within states. Some variations are: a license to sell liquor to take away (a package store) or to consume on the premises (a restaurant or tavern); a license to sell all liquor or just beer and wine; a license that allows entertainment on the premises or prohibits it; a license that is paid for once for a very high price and then is transferable to a new owner (with government approval (I call this the "pay by the bottle" license), or a license that has a far lower annual fee and is transferred by the governmental authority (more like "pay by the drink.") Liquor licenses present special circumstances and definitely should be handled by an escrow agent experienced in this area.

Because any U.S. business that sells or serves alcoholic beverages must have a license issued by the state in which it is located, the liquor license is one of the assets sold when a restaurant, bar, or retailer offering beer, wine or "hard" liquor is transferred to a new owner. Each license has a value which might range from a few hundred to hundreds of thousands of dollars depending on the type of license, and-- since states limit the number of licenses issued--the supply and demand factors in the city and the neighborhood where the business is located. A license held by owner of an expensive and popular restaurant with full bar in an affluent area will be worth considerably more than one owned by the proprietor of a convenience store in an out-of-the-way location that is authorized only to sell beer and wine.



But transfer of the license is not automatic. The buyer must apply to the state's liquor licensing agency, which will investigate the applicant and the business to make sure they meet the agency's requirements, and will agree to the transfer only if it approves the prospective licensee.



Most state liquor licensing agencies recognize four general classes of businesses that require licenses; the classification of the business determines the type of license it needs to conduct business. The four categories recognized in most states are:



--On-sale general or full license: This applies primarily to eating and/or drinking establishments that are licensed to sell virtually every kind of alcoholic beverage for consumption on the premises.



-On-Sale limited, or in many states, On-sale beer and wine: Required for eating and drinking establishments permitted only to serve a limited type of beverage - primarily beer or wine, with lower alcoholic content, by percentage, than beverages that can only be sold by an establishment with a full or general license.



--Off-sale General or Full License: Is held by package liquor stores, super markets, grocery or convenience stores that sell a full range of alcoholic beverages for consumption off the premises.



--Off-sale Limited or Off-sale beer and wine are businesses licensed to sell only unopened bottles or cans of beer or wine, representing the only alcoholic products offered, or in establishments selling beer and wine along with groceries and related items for off-premises consumption.


Other Related Blog Posts, Articles, And Discussions You May Be Interested In

Great Questions To Ask A Seller As A Business Buyer What Questions Should I Ask The Owner, Seller Or Broker?

Asking the seller straightforward questions and getting straightforward answers in return is an important part of the buying and due diligence process. In this Discussion, both ProIntermediaries and Advisors offer thorough questions you should be asking during your meeting with a business seller.
8 Tasks To Help Sell Your Contractor Business 8 Tasks To Help Sell Your Construction Or Contractor Business: New Blog Post

Construction & contractor businesses can be difficult to sell. Licensing requirements, technical experience & owner reliance often create obstacles to getting a deal done. Here are 8 things potential sellers can do before putting your business on the market. Brian Loring explains in this blog post.
Tim Cunha Business Broker SF Bay Area Tim Cunha, JD - Business Broker: San Francisco Bay Area & North Bay Area

SF Bay Area experienced attorney, & business broker, intermediary. I & my EvergreenGold team offer owners sound advice & expertise to build business value & achieve profitable sales. For a FREE business evaluation & SWOT analysis for your business phone me direct at 650-600-3751, 650-866-5393 Text.
Chuck Post Laundry Expert Chuck Post: Laundry Business Buyer Representation, Consulting, Due Diligence

Chuck Post has 35 years experience in the laundry business, specializing in assisting those building, re-tooling, selling or buying coin laundries. Offering specialized services such as: Laundry Buyer Representation, Coin Laundry Valuations, Model Development, Consulting. Call 619-227-5711 (Cell).
Giving Buyers Tax Returns Should Sellers Of Small Businesses Give Potential Buyers Their Tax Returns?

Should small business owners/sellers or brokers/agents give potential buyers direct access to past company tax returns and financials (profit & loss statements) either before or pre the due diligence process? Multiple ProIntermediaries and ProAdvisors discuss this topic on this BizBen Discussion.
How To Select A Business Broker Selecting A Business Broker To Sell My Business: What Should I Look For?

What should your business broker do for you to successfully sell your small to mid-sized business? Well, there's many things that a qualified business broker can and should be doing for you. Multiple ProIntermediaries and ProAdvisors give suggestions and tips to sellers in this BizBen Discussion.
Buying A Business Losing Money Should I Buy A Small Business That is Losing Money? Brokers & Agents Discuss

When considering buying a business that is losing money one has to be very careful. There are reasons that the business could be losing money that aren't fatal or extremely difficult to fix and there are other reasons that should send you running in the other direction. ProIntermediaries discuss.
Harry Sidhu Business Brokerage Services Harry Sidhu Business Broker - California - SF Bay Area, Central Valley, SAC

Assisting both sellers and buyers of businesses - dealing mainly with Liquor Stores, Grocery Markets, Gas Stations, Smoke Shops, Restaurant Related, Retail Related, Service Related. Serving SF Bay Area, North Bay, Sacramento area. Call Harry Sidhu CBB direct for assistance at 510-366-6130 cell/text.
Brian Loring Business Broker Southern California Brian Loring, Broker Specialist: Contractors And Construction - Southern CA

ManageVisors specializes in the sale of contractor and construction services throughout California. Because we focus exclusively on contractors and construction companies, our seller clients benefit greatly from our transactional & valuation expertise. Contact Brian Loring today at 661-360-1769.
Tips For Business Sellers Business Owners: Do Not Make It Hard To Buy Your Business - Successful Tips

Successful sellers of small businesses need a game plan to sell their California small business for maximum price and for the best terms. Peter Siegel, MBA discusses these seller strategies with BizBen Blog readers based on his experience as the lead Advisor with the ProSell Program on BizBen.com.