Don’t Do It: Common Liquor Licensing Missteps
Based on my public and private sector experience, I can tell you that the mistakes described below happen more frequently than they should. This will be a short piece, but hopefully some business owners find this and avoid these common liquor licensing pitfalls.
This article is not legal advice, but if you are considering any of the following please consider speaking to an attorney.
1. Don’t buy a quota license without doing due diligence.
Quota liquor licenses are limited in supply by Florida Law, and as a result they can be quite expensive. They are also a critical component of certain business plans, especially if you are planning to open a night spot. It doesn’t matter whether you are flush with cash or mortgaged to the hilt – if you are purchasing a quota license you should perform a certain level of due diligence.
As an initial matter, you should ensure that the license is free of liens or other potential headaches. Do not take the seller’s word for it, and definitely do not take the seller’s attorney’s word for it. A knowledgeable licensing attorney can perform a lien search and determine whether there are any red flags before you complete the transaction.
The concept of due diligence should also extend to price checking. Many purchasers accept that the first quota they find for sale is appropriately priced. Many purchasers seek financing, but then sign on with the first lender that they speak to. Don’t do that. Prices, interest rates, and other details are negotiable and should be compared.
2. Don’t buy an SFS license (unless it comes with a restaurant).
The SFS license (formerly known as the SRX license) is a valuable licensing option for those that qualify for it. With some strings attached, it allows you to sell beer, wine, and liquor for only $1,820 a year in licensing fees. However, there is no reason to spend significant money to purchase an SFS from a current licensee.
The SFS license is not limited in supply like the quota license. That means that if your business meets the requirements, you can simply apply for a new one at the Division of Alcoholic Beverages and Tobacco. In turn, that means that every dollar you spend to purchase and transfer an existing SFS license could be a waste.
Of course, there are circumstances where you may be purchasing an operating restaurant and the SFS license is a part of the deal. However, please note that acquiring an existing SFS license does not ease the licensing requirements and you must still qualify under Florida Law. The bottom line is that the SFS license should not add significantly to the sales price.
3. Don’t give away a quota license.
It doesn’t matter how small your county is. It doesn’t matter how your business or your late family member’s business ended up closing. Even if the Division has filed an administrative complaint against you for failing to operate the license as required by law, there may be time to find a better solution.
Whatever you do, do not simply relinquish your valid quota license to the Division of Alcoholic Beverages and Tobacco without doing some research.
From experience, I can assure you that there are people looking for quota licenses even in Florida’s smallest counties. Even in the worst-case scenario, a quota license can likely be sold for a non-zero sum of money. There is an informal network of professionals who collectively know a lot about who is looking to buy and sell these licenses in Florida. Consulting an attorney with liquor licensing experience may help you identify potential buyers that will compensate you for the valuable asset that you hold.