For most restaurants and bars, liquor licences can make or break your bottom line. BevSpot recently had the chance to sit down with Karen Simao, a partner at McDermott, Quilty & Miller, LLP specializing in licensing for 15 years and a person who grew up in the hospitality industry. The Boston-based firm concentrates in handling the liquor licensing process for any venue including restaurants, bars, hotels, and package stores in the state.
As the first of an exclusive three-part blog series on the legal process of liquor licensing, we discuss what you can expect from the actual process of acquiring a liquor license in Massachusetts and beyond.
The process of acquiring a liquor license in Massachusetts is challenging but consistent. The law, which is settled but under constant legal debate, demands a strict quota system in most of the local jurisdictions. So, the first step is investigating whether a liquor license is available in the jurisdiction you want your future restaurant or bar to be in. New licenses do occasionally pop up through special legislation in certain neighborhoods. You can investigate if there are new licenses by inquiring at the local licensing board.
If there are no liquor licenses available, which is much more common, the only other option for prospective restaurateurs in Massachusetts is to find and purchase an existing license in your desired jurisdiction. You can do your own research on restaurants that might have a liquor license up for purchase, or engage a reputable restaurant broker to find out which deals might be available for you.
Something that’s important to keep in mind is that beer and wine licenses fall under the same jurisdiction quota as full liquor licenses in Massachusetts. That means it can be just as difficult to find and acquire a wine and malt license as a full liquor license.
If you do find a liquor license up for sale, you would have to draft up an offer sheet for the license. Then, you would move on to the purchase and sale agreement, which should be done with your legal counsel to ensure everything is in order and everyone is held accountable. Lastly comes the closing, but there will be some things that you’ll have to tackle in between signing the purchase and sale agreement and the actual closing—such as working with counsel to prepare complete disclosures and applications for submissions, a public hearing with the local licensing board, outreach to the community and elected officials, and final approval from the state Alcoholic Beverage Control Commission.
Prospective restaurateurs should also realistically allot a four-to-six-month timeframe for this entire process. Obviously, if the sale falls through at any point, you would have to start the process all over again. So, setting pragmatic goals when it comes to time is key. Another thing that’s often overlooked is matching the timing of this process alongside other pieces of your prospective restaurant, such as zoning and rent leasing. Paying close attention to this trifecta and engaging counsel to be able to run these pivotal aspects on parallel tracks is critical in saving time and money.
As for the actual monetary cost, the pricing of liquor licensing in Massachusetts can be similar to the real estate market, in Karen’s eyes. If there are several people looking for licenses, you’ll see inflated prices. On the other side, if there are multiple licenses for sale, you could reasonably negotiate a lower price. For the past few years, prices for issued liquor licenses have been approximately $400K.
This advice on acquiring a liquor license actually applies to all states. On the off chance that you have a lot of personal experience in the legal process of acquiring a liquor license, based the advice we’ve heard, this isn’t something that you’ll want to tackle alone. At least, unless you want to be buried in paperwork and wasting precious time that could be spent in more productive areas like menu building and reviewing floor plans. This process is also something you won’t want to get wrong, as mistakes could lead to penalties and the prenatal death of your restaurant or bar.
If your future establishment isn’t going to be located in Massachusetts, the general advice we received was to investigate who Karen’s legal counterpart is in your state. They will be able to provide you with the right answers and guide you through your state’s process. Finding the right hospitality-specialized legal help in your area can be done by reaching out to locals in the industry or organizations like the National Restaurant Association.
If you are looking for legal counsel in acquiring a liquor license in Massachusetts, or have more questions about the process, feel free to contact McDermott, Quilty & Miller, LLP at (617) 946-4600 or Karen directly at firstname.lastname@example.org. And look forward to the future parts of this series—we’ll cover common pitfalls you might run into during the process as well as red flags to look for in your legal counsel.