When selling a restaurant, the liquor license is often one of the most valuable assets included in the transaction. A liquor license not only adds to the appeal of your business but also has the potential to increase the selling price. However, the process of transferring a liquor license is highly regulated and requires careful planning and execution. As a seller, understanding your role in this process is crucial for ensuring a smooth transaction and avoiding delays that could jeopardize the deal. At We Sell Restaurants, we’ve helped hundreds of sellers navigate liquor license transfers successfully, and this guide will walk you through the steps needed to handle this process with confidence.

Step 1: Understand Local Liquor License Laws

Liquor license laws vary significantly depending on your state, county, and city. Some jurisdictions operate under a quota system, which limits the number of available licenses, making them highly sought-after and valuable. Others may have specific eligibility requirements for buyers like a certain amount of parking or seats. Many have restrictions on how close someone may operator with a liquor license to a daycare center or school. License transfers are required in some states and not allowed in others (requiring a new license). As a restaurant seller, it’s essential to have an excellent source of advice for understanding these regulations and how they apply to your business sales.

For most states, a liquor license is tied to the establishment’s location, meaning it cannot be transferred to another address. In limited circumstances, a license is issued to an individual or legal entity. In almost all instances, there is a person identified with the license who must be a resident of the county/city where the license is used. This individual must consent to fingerprinting and a background check and those with felony convictions are usually ineligible.

These requirements don’t mean it’s impossible to obtain a liquor license. A license can be held in the name of a trusted employee or family member but buyers must be aware of the requirements. In addition, sellers should be aware of any rules regarding temporary licenses, which are issued while waiting on a permanent license. There are also mechanisms in some counties called “management agreements” that allow buyers to operate under the existing license during the transfer process.

If all this seems overwhelming, just know that’s why there are professionals who can assist with the process. A Certified Restaurant Broker has recommendations for liquor license attorneys, liquor license facilitators and are usually familiar with local laws. Using the services of an experience Restaurant Broker will allow the buyer and seller to be more comfortable with the process.

Step 2: Confirm the Status of Your Liquor License

Before listing your restaurant for sale, take the time to confirm that your liquor license is in good standing. Any unresolved issues, such as unpaid fees, violations, or penalties, can delay or even derail the sale. Check with your local liquor authority to ensure that your license is active and compliant with all regulations.

Buyers will perform their due diligence on your business, and any red flags related to the liquor license can erode their confidence or lead to renegotiations. Addressing these issues upfront demonstrates professionalism and helps maintain trust throughout the process. Additionally, having a clean record makes the transfer process more straightforward for both parties.

Step 3: Work with a Certified Restaurant Broker

Selling a restaurant is a complex process and adding a liquor license transfer into the mix makes it even more challenging. This is where the expertise of a Certified Restaurant Broker becomes invaluable. Brokers understand the intricacies of liquor license transfers and can guide you through the process while ensuring compliance with local laws.

At We Sell Restaurants, our brokers work closely with sellers to prepare all necessary documentation, resolve potential issues, and coordinate with the buyer’s team. From providing advice on temporary operating agreements to liaising with landlords and liquor boards, brokers streamline the process and minimize the risk of delays.

Step 4: Prepare for Buyer Inquiries and Documentation Requests

Buyers will have questions about your liquor license and being prepared to provide detailed information is crucial. Common inquiries include:

1. The type of license (e.g., full-service, beer and wine only).
2. Whether the license is tied to the location or transferable to another address.
3. Any restrictions or conditions attached to the license, such as hours of operation.
4. The current status of the license (active, suspended, or pending renewal).

Having organized records can make a significant difference in this phase. Sellers should prepare a comprehensive package that includes the license details, proof of compliance, and any correspondence with local liquor authorities. Providing this information upfront reassures buyers and expedites the due diligence process.

Step 5: Address Lease Agreements and Landlord Approvals

If your restaurant operates in a leased space, and there is no liquor license in place, adding one to the location may require landlord approval. Some landlords include clauses in their leases that give them control over whether liquor is offered in their space. Buyers should carefully review the lease agreement and communicate with the landlord about the menu and any potential to add alcohol.

Step 6: Assist with the License Transfer Application

The actual transfer of the liquor license requires submitting an application to the local liquor authority. While this step is ultimately the buyer’s responsibility, sellers play an important role in ensuring the process moves forward without complications. Your role may include:

• Providing the buyer with a copy of the current license.
• Offering proof of compliance, such as documentation of resolved violations or completed renewals.
• Coordinating with your broker to address any concerns raised by the liquor authority.

In some jurisdictions, sellers must remain involved until the transfer is officially approved. For example, you may need to attend hearings, complete inspections, or provide additional documentation. Staying engaged during this phase ensures a smoother process and prevents unnecessary delays.

Step 7: Understand Temporary Licensing Options

Depending on your state’s regulations, buyers may be able to operate the restaurant under a temporary license while the transfer application is being processed. Temporary licenses allow the buyer to continue serving alcohol without disruption to the business, which is especially important for restaurants that rely heavily on beverage sales.

As the seller, you may be required to oversee the buyer’s use of the temporary license or maintain certain responsibilities until the transfer is complete. For example, some states require the seller to remain listed as the license holder until the buyer’s application is fully approved. Understanding these requirements and working with your broker to create a clear agreement can help avoid confusion and ensure compliance with local laws.

Step 8: Resolve Any Final Obligations

Before closing the sale, sellers must address any remaining obligations related to the liquor license. This includes paying outstanding fees, resolving tax liabilities, and ensuring compliance with all renewal requirements. Leaving loose ends can cause delays in the transfer process and may even result in legal complications after the sale.

Additionally, sellers should provide buyers with a clear record of the license’s history, including any inspections, violations, or renewals. Transparency during this phase builds trust and reduces the likelihood of disputes.

Step 9: Closing the Deal

The final stage of the liquor license transfer process coincides with the closing of the restaurant sale. Once the liquor authority approves the transfer, the license officially moves to the buyer’s name, and you, as the seller, are relieved of your obligations. At this point, all conditions outlined in the purchase agreement should be fulfilled, including the transfer of equipment, inventory, and any other assets.

For sellers, this moment represents the conclusion of a significant chapter in your professional life. Successfully navigating the liquor license transfer process ensures the deal closes smoothly, allowing both parties to move forward with confidence.

Common Challenges Sellers Face

Selling a restaurant with a liquor license can come with its own set of challenges. Delays in processing applications, unresolved compliance issues, and unexpected landlord requirements are just a few examples. Additionally, buyers may struggle to meet eligibility requirements, such as passing background checks or demonstrating financial stability.

To overcome these obstacles, sellers should stay proactive, work closely with their broker, and maintain open communication with all stakeholders. Anticipating potential roadblocks and addressing them early can prevent disruptions and keep the transaction on track.

Conclusion

Transferring a liquor license is a critical part of selling a restaurant, and it requires careful planning, collaboration, and compliance with local regulations. As a seller, your role in this process is essential to ensuring a smooth transaction and maintaining the buyer’s confidence. By understanding the steps involved, preparing thoroughly, and working with experienced professionals, you can navigate this process successfully and achieve your goals.

At We Sell Restaurants, our team of Certified Restaurant Brokers specializes in managing liquor license transfers and guiding sellers through the complexities of restaurant transactions. Whether you’re selling a long-established eatery or a franchise location, we’re here to make the process as seamless as possible, from listing to closing.