Running a restaurant in Ontario? You’ll need to obtain a liquor license from the Alcohol and Gaming Commission of Ontario (AGCO) if you plan to serve and sell alcohol of any kind.
If you plan to start a restaurant from the ground up, you’ll need to apply for a liquor license on your own, but if you’re buying an existing business, you may be able to have the current owner’s license transferred to you.
Not only can liquor licenses be transferred to another person, but it’s often easier and more efficient than starting from square one. However, that doesn’t mean the process isn’t completely hurdle-free either.
In this blog post we’ll look at everything restaurant owners need to know about liquor license transfers.
Planning to serve alcoholic drinks in your restaurant? Find out what restaurant owners should know about Smart Serve.
How Liquor Licenses Work in Ontario
Whether you’re buying a restaurant that currently sells alcohol or you plan to make it available when you take over operations, you’re going to need your own liquor license. The keywords here are your own.
Let’s say you’re buying a business that’s already licensed. That doesn’t mean it will automatically carry over once the deal is done.
Some important background information: In Ontario, liquor licenses aren’t attached to specific business (like a bar or restaurant) or business premises. Instead, licenses are granted to individual licensees. This could be a single owner operator, partnership, or corporation.
Because of this, transferring a liquor license isn’t as simple as handing off a piece of paper from one restaurant owner to the next. It’s a formal process that comes with all kinds of red tape and requires approval from the AGCO.
Interested in buying an existing business? Check out these related blog posts next.
- What is the Average Profit Margin for a Restaurant?
- How Much Does it Cost to Open a Restaurant?
- Can You Buy a Restaurant as an Investor?
Transferring a Liquor License: How it Works
In the context of a restaurant sale, a license transfer is typically initiated by the current licensee (in close communication with the buyer) during the closing process. Just like a new application, it can be done online via the iAGCO portal.
Next, the AGCO will do their due diligence on both the existing and future licensee, including background and financial checks. If there are any red flags, outstanding monetary penalties, or other issues that would make the incoming buyer ineligible for licensing, the transfer will be denied.
If everything looks good, the transfer is usually processed and finalized in a few weeks to a few months.
Authorization to Contract Out
When submitting a transfer application, the current licensee and buyer can request an Authorization to Contract Out. This is a separate temporary license that allows the buyer to take on business operations (including alcohol sales) while the license transfer is still being processed.
Thinking about starting your own restaurant business? Explore these related blogs for more advice!
- What Permits Are Needed to Open a Restaurant in Ontario?
- Ready to Open Your First Restaurant? Here’s Where to Start
- Ways to Reduce Operating Costs as a Restaurant Owner
What’s Needed to Transfer a Liquor License
Just like applying for a new license, transfers require some degree of preparation and administrative paperwork. This is something your restaurant real estate agent can help you with during closing.
Here’s a look at what’s needed to transfer a liquor license in Ontario.
- An entity disclosure and personal disclosure
- A consent to transfer form
- Confirmation that the transfer of restaurant ownership has been completed
- Payment of a one-time $1,000 fee
- Your Authorization to Contract Out
Why Not Apply for a New License?
So, what makes transferring a license easier than just applying for a new one?
For starters, the costs are slightly lower which can be helpful when you’re launching a new business. Transferring a liquor license comes with a one time fee of $1,000, whereas applying for a brand new license can cost around $1,055 to $1,355 depending on the circumstances. You can check out ACGO’s portal for up to date pricing.
More significantly, transferring a liquor license also reduces the odds of lost revenue since your Authorization to Contract Out allows for the continued sale of alcohol while the transfer is being processed. If you start a brand new application, there’s no guarantee that you’ll be approved by your preferred date. This can create a weeks- (or even months-) long gap where you’re not legally allowed to serve customers alcohol.
Lastly, license transfers can bypass some of the regulatory hurdles that new applicants have to deal with. For example, applying for a fresh liquor license generally requires you to notify the public. If there are concerns or objections from the nearby community, you could face delays or even have your application denied. By having a license transfer to you, you’re able to skip this step.
Bring Your Vision to Life
If you’re looking to buy a restaurant, you’ll want a professional expert in your corner. That’s where we come in, Carve Real Estate.
As professional specialists, we know the unique ins and outs of commercial real estate and Canada’s restaurant industry. Not only can we help you find the perfect spot to bring your dreams to fruition, but we’ll also serve as your long-term advisor on all things restaurant-related, including financing, license transfers, and more.
Looking to buy a bar or restaurant in Ontario? Carve Real Estate can help! You can reach us by email at ryan@carverealestate.com or by phone at 416-618-0054.
