Purchasing a licensed hospitality venue is an exciting opportunity, but it’s also a highly regulated process which will require you to cover your bases on a multitude of issues – and that’s BEFORE you open your doors!
So, you have completed your due diligence on the business’s financial status and agreed on the ownership of assets such as equipment, furniture and inventory, discussed intellectual property rights over branding and have reviewed the staff’s contracts and entitlements.
It is absolutely critical that prior to finalising the lease and/or the contract for the sale of the business you take a close look at the liquor licence and clearly understand the class of licence that your new business will operate under and the licence conditions that apply.
Compliance with Legislation and Regulations
Liquor licences are highly regulated and strict compliance with the Liquor Control Act 1988 and it’s associated Regulations is necessary to operate legally. If the licence is not in good standing, has been breached in the past, or has had work orders issued, you, as the new owner, could inherit various problems.
Licence Conditions May Affect Business Operations & Future Business Plan
Different liquor licences come with varying conditions, such as restrictions on trading hours, types of alcohol sold, or limitations on entertainment. Reviewing these conditions ensures that the buyer understands how they will impact the business’s operations and profitability.
If the buyer plans to expand or change the nature of the business (e.g., offering live entertainment or extending operating hours), the current liquor licence conditions may not permit these activities. Knowing the limitations of the licence in advance allows the buyer to make informed decisions about what they will be allowed to do in the future.
Whilst you can apply to have certain conditions varied or cancelled, it is important to have explored whether this will be possible, what will be required to obtain approval and how long this might take.
Public Interest and Community Concerns
As a licensee you have a responsibility to minimise offence, annoyance and disturbance that result from the operations of your venue. If the venue has been subject to complaints or issues, such as noise disturbances or antisocial behaviour, the licence could be under scrutiny that may affect future plans to develop the business. For example: adding a beer garden, presenting live bands, catering for functions and special events.
Financial Liabilities
Any outstanding debts, fines, or unpaid fees related to the liquor licence could be passed on to the new owner. It’s essential to verify that the current licensee is financially compliant to avoid inheriting hidden liabilities.
Potential for Revocation
If the previous owner has breached the liquor laws (e.g. selling alcohol to minors, allowing intoxicated patrons to purchase liquor or remain on the licensed premises), the licence might be under threat of suspension or cancellation. Understanding the history of the licence is crucial to avoid purchasing a business that is under threat of losing its licence.
Licence Transfer Complications
Liquor licences are not automatically transferred with the sale of a business; the licensing authority must approve a formal transfer application before you can take over the business. If the buyer does not meet the suitability criteria or if the application is incomplete, the transfer could be delayed or rejected, putting the sale at risk and/or having to operate without a licence.
Not all transfers are straightforward and will not always involve a sale of a business, in such instances legal advice should be sought on how best to achieve the transfer of the licence.
It is also important to note that settlement cannot take place until the transfer application has been approved.
In addition, during the transfer process the existing licensee must not vacate the premises and the applicant must not sell or supply liquor until approval has been given by the licensing authority. If the licensee has vacated the premises prior to the transfer application being lodged then consent for the transfer may be given with ‘leave of the Director’.
Why You Should Contact Fraser & Associates Lawyers
We can help you navigate the liquor licence transfer process and provide advice on any concerns you have about the licence and/or the existing trading conditions.
We will guide you if there are restrictive trading conditions which might hamper your proposed business model.
One of the most challenging aspects of transferring a liquor licence is ensuring that all documentation is submitted correctly and on time and also when complications arise.
We can manage the entire transfer application process on your behalf, from preparing the necessary paperwork to liaising with the Licensing Authority up to approval, freeing up valuable time to let you get on with your planning and set-up.
Contact Fraser & Associates Lawyers today to discuss your liquor licence transfer needs and make your venue purchase a stress-free experience.