Last week, we answered a couple questions about what happens to food and liquor inventory during the sale of a restaurant. Our clients have also inquired as to whether the licenses from the health inspectors or alcoholic beverages division can be transferred to the new owner of the restaurant.
FOOD/HEALTH INSPECTION LICENSE: A food license is not transferable from one owner to the next. (IA ADC 481-30.3). Any time a new owner takes over operations or is added in as a partner, a new license must be obtained. The same is also true if an establishment simply changes location. In order to obtain a new license, an owner must apply for the license with the Department of Inspections and Appeals, an inspection will be done, and upon approval, the license will be distributed. On the other hand, if a corporation owns a restaurant, a change in officers or stockholders of the corporation does not require a new license. (Judy Harrison, Bureau Chief, IA Dept. of Inspections and Appeals, 515-281-6538).
LIQUOR LICENSE: A liquor license may not be transferred from one person to another. (IA ADC 185-4.13). Consecutive owners must reapply for the license through the Alcoholic Beverages Division. However, a liquor license may be transferred from one location to another, as long as the ownership remains the same. In order to do this, the licensee must file an application for transfer of liquor license, wine permit, or beer permit with the Iowa Alcoholic Beverages Division. The transfer is limited by jurisdiction, depending on the boundaries of the issuing authority. If the authority was on the county-level, it may be transferred within the county, but if the authority was a city authority, it may only be transferred within the incorporated city limits.
CONCLUSION: Licenses, whether for food/health inspections or allowing the sale of liquor, cannot be transferred to a new owner. Each owner must apply for a license through the respective Iowa administrative agency.
At Kreamer Law Firm P.C., we can help make each step in transferring ownership of a restaurant easier for both the buyer and the seller. If you, or someone you know, have any questions about buying or selling a restaurant, contact us at firstname.lastname@example.org or call us at 515-727-0900.
Many times we have clients who come in for assistance in purchasing an existing restaurant. Typically the scenario is that Bill Buyer (B) is planning to buy a restaurant from Owen Owner (O). B wonders if he can buy any of the liquor or food inventory that O has in stock. He also wonders if any of the licenses from the health inspectors or alcoholic beverages division can be transferred from O to B.
What restrictions are placed on the sale of liquor or food inventory during the sale of a restaurant?
SALE OF LIQUOR OR WINE INVENTORY: In order to legally sell wine, beer, and/or liquor the business owner must have a license. These are normally issued by the City in which the restaurant/bar is located. The seller of the restaurant/bar (the “licensee”) may sell their stock of alcoholic liquor and wine to the new owner, as long as the new owner will be operating the business in the same location. (IA ADC 185-4.36). When making this transfer, it is strongly advised that the new owner make certain to detail within their records which inventory was received as a part of the sale of the business, since liquor sale records are required to be open for inspection. (IA Code § 123.33). They must also make certain that the inventory is affixed with the proper seals (IA refund 5¢), as all liquor must be obtained from a licensed wholesaler. (Lynn Walding, Administrator, IA ABD, 515-281-7402).
SALE OF FOOD INVENTORY: Food inventory is frequently sold as part of the sale of a restaurant. There are really no code provisions regulating this. The sale of food inventory should be itemized in the contract for the sale of the restaurant, with specific provisions identifying the items and quantities requested. Frequently, the contract will include a minimum dollar amount of inventory (including food, to-go containers, etc.) that must be on hand for the sale of the business, with discrepancies affecting the sale price.
Be sure to check back next week where I’ll be discussing whether of the licenses from the health inspectors or alcoholic beverages division can be transferred as part of a sale of a restaurant and/or bar. In the meantime, if you need any help or have any questions about buying, or selling, a restaurant feel free to email us at email@example.com or call us at 515-727-0900.
Again, I go on air to discuss with Michael Libbie the final part of our Three-Part Interview on “What Happens to Your Business If Anything Happens to You?” This time we’re discussing who will have the power to make the decisions for your business if you can’t.
Click the link below to watch the podcast, and if you need legal help with any business questions or concerns, please feel free to email us at firstname.lastname@example.org or call us at (515)727-0900.
Recently I was able to record a short video explaining what it is we do at Kreamer Law firm and how we can help you with legal assistance in your Business, Corporate, Estate Planning, and Probate needs.
Click the link below to watch our video, then head over to our Practice Areas tab for more information!
If we can help you in any of our various practice areas, feel free to call us at (515)727-0900, or email us at email@example.com.