Whether you are looking to buy permits, sell permits, or simply change your business location, there are many issues to be aware of. The information below offers a starting point on how the Ohio liquor permit transfer process works and some things to consider before you begin.
There are a few preliminary notes every individual or business should understand before starting the Ohio liquor permit transfer process:
Liquor permits alone cannot be bought and sold. The transfer must be in conjunction with a bona fide sale of the business or assets pursuant to Ohio Administrative Code 4302:1-1.14. Such assets may include furniture, inventory, or other equipment.
A transfer application and supporting documents will be required. Some of these requirements include either a lease or a summary of tenancy rights form, a background check for certain owners and officers, officer/shareholder/LLC disclosures, and copy of the purchase agreement or a summary of purchase agreement form… to name a few. It is very important to properly complete these forms to avoid delays or rejection of the transfer application.
When transferring locations, the new location may have to be "wet" for alcohol sales, depending on the type of the permit being transferred. If the location is "dry", a local option election may be required. Additionally, a physical inspection by a Division compliance officer may be required for the new location. A Division compliance agent will check to see what public institutions (such as churches and schools) are within a 500 ft radius of the new premises. Each authority in charge of the institution will be notified and provided a 30-day window to object to the issuance of the permit.
No transfers are approved until the Ohio Department of Taxation notifies the Division of Liquor Control that all taxes are current. In other words, a seller will not be able to transfer a permit if they have outstanding taxes or unfiled returns associated with the liquor permit.
The current permit holder or the buyer may cancel the transfer application before its issuance. To cancel a transfer, a signed cancellation request must be submitted to the Ohio Division of Liquor Control.
Transaction Types:
Transfer Ownership at the Same Location to another person/business
In this situation, the new person/business will continue to operate at the original location. Many parties in these arrangements elect for the buyer to operate the liquor permit during the transfer period under a “management agreement”. These arrangements are not officially recognized by the Ohio Division of Liquor Control, which means the seller is generally still liable for any violations that occur under the permit (including citations and tax issues).
Transfer Ownership and Location to another person/business
When the permit is transferring to a new owner and location, neither the seller nor buyer can sell alcoholic beverages at the new location until the Division of Liquor control approves the permit. This is unlike the transfer of ownership at the same location in which the new owner may operate under a management agreement prior to transfer approval.
Transfer the Location of your Existing Business
In this situation, ownership of the permit does not change; all that would change is the physical address of the liquor permit. The same rule applies as above; alcoholic beverages may not be sold at the new location until the transfer is approved.
Sometimes, an individual or business is unable to locate a business for sale in the area that holds a liquor permit, or the municipality has met its liquor quota permit. Fortunately, ORC 4303.29 provides the transfer of certain permits through a process known as the Economic Development Transfer process (or “TREX”). This effectively allows an applicant to transfer a liquor permit to another area of the state.
Last but not least, the transfer process can be incredibly cumbersome at times, and can lead to serious liability hazards, primarily for the seller. The restaurant industry has notoriously high failure rates compared to other industries, which means it is not unheard of for a buyer to operate under a management agreement pending transfer approval, and then go out of business before the transfer is approved. in such event, the seller may be stuck with liabilities incurred during the management agreement period, including unpaid taxes. Therefore, it is critical to consult with an attorney who if familiar with Ohio liquor law prior to entering contracts and filing a transfer.