Stress-Free Alcohol Beverage Control (ABC) Liquor License Transfers
Transfer a California liquor license in a business sale has caused a number of buyers and sellers to throw up their hands in frustration or throw in the towel on the deal. Here at Mission Peak Brokers, we have worked on hundreds and hundreds of California liquor license transfers. Because we specialize in gas stations, liquor stores, restaurant & bar sales, we negotiate a liquor license transfer in nearly every deal we transact.
Through nearly 2 decades of working with California’s Alcohol Beverage Control Board (ABC), we’ve learned a few things about how to successfully transfer a California liquor license in a business sale. No part of it is “hard” per se but errors, hassles and delays occur for the unwary. For the informed, prepared and conscientious, transferring your California liquor license in a business sale can be relatively stress-free and that’s where we come in.
What is an ABC liquor license in California?
First things first. A California liquor license permits a California business to sell liquor either to be consumed on the premises or to be taken away. There are a variety of different types of licenses based on where the alcohol will be consumed and what type of liquor will be sold.
For more information on the types of liquor licenses, click here: ABC Types
The laws governing California’s liquor license are complex and involved. It is incumbent on anyone seeking to hold one of these highly valuable licenses to inform themselves about the laws and regulations that govern their license to assure full compliance and to avoid jeopardizing losing their license.
For more information pertaining to California’s liquor license laws, click here: ABC Laws
How do I get an ABC liquor license in California?
To get a California liquor license, the applicant must go through a challenging bureaucratic process to assure legal compliance, controls against saturation of liquor sales within an area and that the appropriate type of license is issued for the correct purpose.
Fortunately, in business sales, the California liquor license usually exists and makes up part of the assets that are sold for value to the buyer. Consequently, the seller facilitates the transfer of the liquor license to the buyer so long as the buyer meets the minimum requirements as set by the state.
On occasion, the existing liquor license might be limited to beer & wine sales and the buyer may want to expand the type of liquors sold and may then seek to enhance their license post-sale.
How to transfer a California liquor license in a business sale?
To transfer a California liquor license in a business sale, the seller must relinquish their interest in the license. The seller will do this at a later point in the escrow process after contingencies of sale are removed, the bank agrees to finance the business sale and the landlord agrees to transfer the lease.
The process may take 6-8 weeks. It typically involves identifying the correct forms to be completed and signed. The buyer must pass a background check and then pay the necessary transfer fees in order to secure the license.
The process is typically known as a Person to Person Transfer. This type of transfer may occur between individuals, corporations, LLCs, partnerships and/or trusts. Depending on who/what is transferring and who/what is receiving, different types of forms are used.For example, the forms used in a business sale involving two sole proprietors is somewhat different than a business sale involving two corporations.
As of the date of this writing, there are over 80 forms used by the ABC, so it is imperative that the parties properly identify ALL the correct forms needed to complete the transfer.
In every liquor license transfer connected to a business sale, an essential form is ABC Form 208-A called “Individual Personal Affidavit” & ABC Form 208-B called “Individual Financial Affidavit”. These forms require the buyer to verify information pertaining to their background and finances. They require information such as whether the buyer has, or has had, other liquor licenses; information about the buyer’s spouse; and whether the buyer and/or spouse has any criminal convictions, fines or are presently being prosecuted.
ABC = Always Be Complete
For all intents and purposes, ABC should stand for “Always Be Complete”. It should go without saying but it is fundamentally important that the buyer complete this form truthfully and completely to transfer a California liquor license in a business sale. The buyer is completing the form under penalty of perjury. Omissions and falsehoods may prevent the buyer from get the liquor license transfer and/or prosecuted.
While there are no clear-cut rules for disqualification of an applicant based on their criminal background, what may lead to disqualification is the omission of this information. Even applicants with DUI and felony convictions may be eligible for ABC liquor licensing, depending on the type of offense, how long ago it occurred, the outcome and whether the buyer met the terms of their conviction. The key here is to fully disclose all relevant information to the ABC when applying for the license.
For example, one of my clients been thru two DUIs, we disclosed this fact on form 208A personal affidavit by documenting date of incident, date of arrest along with documentation from court showing the outcome of the case. We were able to secure license for this client and where successful in the transfer a California liquor license in a business sale.
One of the biggest issues that we see is that the application is incomplete in some way either by the seller or buyer. Information is omitted, something is not signed, a fee is not paid, someone failed to disclose something. This will then set the process back weeks as the application is revised and resubmitted. Again, because we are dealing with a very, very busy bureaucracy, everything takes time and errors waylay the process.
In the transfer a California liquor license in a business sale, we can’t stress enough that it is very important to be thorough, complete and fully disclose all pertinent information in order to effectively process the liquor license transfer. Failing to properly do so can needlessly delay the transfer and transaction or kill the deal entirely.
Should you need assistance with transfer a California liquor license in a business sale, contact us for a consultation. We are happy to provide you with the benefit our knowledge, experience and insight.