Getting What You Pay For When Buying a Restaurant-Part Two

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 info@kreamerlaw.com or call us at 515-727-0900.

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