How To Sell a Liquor License in Florida
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Looking to Sell a Liquor Permit in Florida?
If your thinking about selling a liquor license in the State of Florida, there are some important things that you should know. The team of hospitality lawyers at Sawan & Sawan have years of experience navigating State hospitality laws and can help aid you through what can be a confusing and highly technical process. Our team of Florida Liquor License lawyers created this guide to help explain the basic information about selling a liquor license in Florida. To begin, Florida Statute §561.32 states that:
Licenses issued under the provisions of the Beverage Law shall not be transferable except when a licensee has made a bona fide sale of the business which he or she is so licensed to conduct, he or she may obtain a transfer of such license to the purchaser of the business, provided the application of the purchaser is approved by the division in accordance with the same procedure provided for in ss. 561.17, 561.18, 561.19, and 561.65
Our team of Florida Liquor License lawyers are intimately familiar with the application process in Florida, and know how to abide by the procedures of the Florida Division of Alcoholic Beverages and Tobacco.
Wondering What Type of Permit You Need?
Types of Liquor Permits in Florida
How Much is a Liquor License Worth in Florida?
If you have a permitted business that you are looking to sell, you should understand that full liquor quota licenses in Florida must be obtained directly from an existing license holder. Thus, they are typically much more expensive than applied-for licenses due to scarcity. When discussing cost, it’s also important to focus on the term “Bona Fide Sale” when you are selling a liquor permit in Florida, as the statute authorizing transfers makes it a requirement. While not always subject to exact definition, the general concept of a bona fide sale under Florida law is as follows:
As part of this “bona fide sale”, business assets are transferred with the permit – the value of which can vary greatly. Depending on the types of assets including, this can have a large affect on the purchase price. It’s also important to remember that not all permits in all counties are of equal value, as some Counties may have wider quota availability. However, in general, liquor permits in Florida can range anywhere from $50,000 to close to $1,000,000.
Not All Permits Are Eligible for Sale
Florida law requires that a permit holder maintain the operation of an alcohol permitted business in order to retain those privileges. Failure to follow the strict time guidelines can result in revocation or suspension – which can have major effects on the transferability of a license in Florida. Specifically, Section 561.29(1)(i), Florida Statutes states that:
failure to maintain licensed premises in an active manner in which the licensed premises are open for the bona fide sale of authorized alcoholic beverages during regular business hours of at least eight (8) hours a day for a period of 210 days or more during any 12- month period in a manner so as to maximize sales and tax revenues thereon, may result in this license being revoked or suspended.
As a result, it’s vital that you work with all of the parties to a bona fide sale of a liquor license in Florida to establish compliance with this law – and many other Florida laws – that may affect transferability of a permit. If you need assistance with this, please give our team of Florida Liquor License lawyers a call today to schedule a free consultation.
The Florida Liquor License Sales Process
In Florida, the law holds that every business or individual that sells alcohol is required to apply for and obtain a license issued by the Florida Division of Alcoholic Beverages and Tobacco, Bureau of Licensing. The process of selling a liquor permit in Florida is a formal, often complicated legal process that requires knowledge and awareness of a patchwork of rules and regulation governing the license itself, the business operations and the application or transfer of a license. In general, the basic process of selling a permitted business in Florida includes the following steps:
Step 1: Negotiating the Sale
The first step in the process involved working with a buyer to establish a purchase price. Before talking numbers, we recommend taking full stock of inventory and assets on hand and included in the deal and itemizing them. We also advise speaking to a qualified Florida Liquor License Lawyer to get a better understanding of the supply and demand factors that bear on the value of your permit.
Step 2: The Asset Purchase Agreement
Once the price and terms have been negotiated, the next step is to put these terms into writing. This document is referred to as an asset purchase agreement. It contains the sellers offer to sell as a set price, as well as the buyers acceptance of a total purchase price. It’s important that this document also include terms that deal with transfer fees, renewal costs, tax liabilities and more.
Step 3: Escrow Payment
Typically, within a short period of time after the execution of the asset purchase agreement, the buyer will be required by the contract to place fines in a trust account. Depending on the terms of the asset purchase agreement, this initial escrow deposit can be either non-refundable or refundable to the buyer upon the occurrence of some contractual event.
Step 4: License is Taken off the Market
Once the asset purchase agreement is signed and the escrow payment is made, the seller will take the license off the market. This will begin a period of due diligence and the setting of a closing date for the transaction. Generally speaking, the result of any due diligence related to the license will be freely shared amongst the parties. In Florida, it’s common to have attorneys on both sides of this transaction.
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Step 5: Seller Executes Documents
In order for a transfer application to be filed by a prospective buyer in Florida, the seller needs to execute certain documents. In general, these documents include a bill of sale, transfer affidavit, and any other affidavits that become part of the transfer application package. In some circumstances, we will hold certain items in escrow until closing. One of the biggest ways to ensure prompt and efficient processing of a transfer application is to diligently and efficiently complete any and all documents that are required of a seller.
Step 6: Transfer Fees
In Florida, the transfer fee for a liquor license is variable. The transfer fee on quota liquor licenses is assessed on the average annual value of gross sales of alcoholic beverages for the three (3) years immediately preceding submission of the application to transfer the license. The fee is levied at the rate of four mils and in no event exceeds $5,000. Many business owners prefer not to provide the State with the books of a business, so in lieu of providing records for computation of the transfer fee, the applicant may elect to simply pay the $5,000. In this step, we calculate any transfer fees that are applicable and inform both parties of this amount. In some circumstances, these fees are payable by the seller as a deduction from the seller’s proceeds at closing.
Step 7: Pro-Rated License Fees
Since many sellers have already paid annual fees to the state of Florida for their liquor permit, it’s important to pro-rate the license fee and ensure that the relevant portion of that fee is attributed to both parties upon approval of transfer. The asset purchase agreement would typically dictate how this process will work, but usually some negotiation is required.
Step 8: Transfer Processing
The buyer submits a transfer application to the state of Florida, and we monitor the progress to ensure that the job is getting done in a timely fashion. If there any delays occasion by the in action of the buyer, we will interface with the buyer or their legal counsel to ensure that the process is moving forward. Often times in the ass and purchase agreement we will demand that the transfer application be filed within a certain time period. Along these lines, our Florida liquor license lawyers will monitor the transaction for compliance with the terms of the asset purchase agreement.
Step 9: Closing
At closing, the buyer delivers the balance due to close to our trust account for disbursement to the seller. This will include the pro-rated license fee and any applicable transfer fees paid by the seller. A closing statement and disbursement sheet is generated informing the seller of the gross amounts received and net amounts payable.
Step 10: Temporary Licenses
In some circumstances, a temporary liquor license is available to begin to conduct business in the state of Florida while a transfer application is pending. The buyer wishes to obtain such a license, we ensure that the seller has met any and all obligations they may have to ensure that the buyer can get such a temporary license.
Do I Need a Lawyer to Sell a Liquor Permit in Florida?
While you do not strictly need a lawyer to buy or sell a liquor permit in Florida, we strongly advise that you retain one. There are a number of reasons for this. To begin, the purchase or sale of any business – but especially one that holds a Florida Liquor License – is a complex legal transaction. In particular, since many quota license sales in Florida are very expensive, having competent and experience legal counsel on your side is always advisable. A couple of areas in a liquor license transaction where a lawyer is of particular value are as follows:
The Purchase Agreement
It’s vital that you’re working with the correct kind of purchase agreement when you’re buying or selling a liquor license in Florida. These documents are a by-product of tremendous care and experience. In order to be effective, the asset purchase agreement must accurately and timely protect both parties, the seller and the buyer. Out of any contract, it’s important that the document accurately reflects what each party is entitled to. It should also clearly set out each parties obligations and detail the necessary steps, timelines and closing procedures for the transaction.
Locking in the Sale
The buyer and the seller both have different considerations when it comes to the timeline for a transaction involving a Florida liquor license. For the sellers part, the seller needs to be assured that they are working with a motivated, willing and able buyer. To this end, the legal documents surrounding the transaction should not be formed in definite time frame, but should instead hold open an offer for a definite period of time before freeing the seller to seek other buyers. For the buyers part, the buyer needs to know that upon doing certain things in the contract, that the deal is “locked in.” What are the easiest ways to meet both sides interests, is to navigate the buyer to place earnest money deposit with the seller. The earnest money in liquor license transactions is often at risk in the event the buyer ultimately does not choose to purchase it or otherwise attain the license.
Avoid Closing Complications
As the buyer and seller a post closing, it’s important that the parties have accurate and complete paperwork. This is often created by the sellers counsel well in advance of closing and transmitted to all parties for their review. The staff can be very involved, and if not handled correctly can present many complications to the transaction. Communication is incredibly important as closing gets closer.
In effort to protect the seller, the annual license fee must be prorated and accurately calculated. Depending on the terms of the purchase agreement, this is often payable by the buyer to the seller at closing as reimbursement for fees that were already paid the state of Florida for the balance of the existing license year. Failure to account for these fees and cost the seller thousands of dollars.
Can I Transfer a License From One Florida County to Another?
The short answer is – it depends. In Florida there are a number of different types of liquor licenses that one can obtain. Or in general, they fall into two main categories. The first category our licenses that permit for the sale of beer and Wine. The second category are permits that permit for the sale of spiritous liquor. The rule for transferring a license from one county to another in Florida depends on what type of category the license falls in.
Beer and Wine
A Florida license to sell beer and wine is freely transferable from county to county in Florida. However, in order to do so, a transfer location fee is applicable.
A license to sell liquor in Florida cannot be transferred out of the county in which it was initially issued. This is due to the limitation of the number of licenses for each county in Florida. , if you want to get a liquor license in Florida, you need to obtain one that is already within the County or obtain a new quota permit when one becomes available.
Going Out of Business. Can I Sell My Alcohol Inventory in Florida?
- Vendors who make a request for return of undamaged products within ten days after delivery may receive cash or a credit against outstanding indebtedness within ten days after the request and at the same time the distributor picks up the products. Distributors must make and keep a transaction record of all exchanges detailing the request, the date, the licensed vendor, business name and address, the vendor’s license number, and the product returned for cash, or credit.
- No return of the product shall be permitted if the vendor’s request is made more than ten days after the delivery date, except in the following circumstances:
(a) Products which may no longer be lawfully sold. Any situation where, due to a change in regulation or administrative procedure over which the vendor or employee/agent of the vendor has no control, i.e. a particular brand or size is no longer permitted to be sold, may be corrected through return of the product for cash or credit against outstanding indebtedness.
(b) Termination of business. Any time a vendor terminates operations products on hand at the time of termination may be returned for cash or credit against outstanding indebtedness. This does not include a temporary seasonal shutdown.
(c) Change in product. Any time a vendor’s inventory of product has been changed in formula, proof, label, or container, the product may be returned for equal quantities of the new version of the product. This does not include the return or exchange of products for which there is only a limited or seasonal demand, such as holiday decanters and certain distinctive bottles.
(d) Discontinued products. Any time the production or importation of a product is discontinued, a vendor’s inventory of the discontinued product may be returned for cash or credit against outstanding indebtedness.
(e) Seasonal dealers. Any time a vendor who is only open for a portion of the year, has product remaining at closure that will spoil in the off-season, those products may be returned for cash or credit against existing indebtedness.
(3) If product is returned in excess of ten days after receipt using the exceptions listed in paragraphs (2)(a) through (e) of this rule, documentation of the qualifying event must be maintained with the record made by the distributor pursuant to subsection (1) of this rule. All records must be made available to the division upon request.
(4) Distributors shall not make consignment sales to vendors. Vendors shall not attempt the return or exchange of product because the product is overstocked or slow-moving.
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