Opening A Bar? Some Thoughts to Sip On…

There’s certainly a ‘cool factor’ to owning a bar. For restaurant owners, adding the sale and service of alcohol is another valuable revenue stream. The application process for a New Liquor Sales License with the AGCO is oftentimes a tedious and costly procedure. Businesses that ignore careful planning and professional consultation run the risk of incurring thousands of dollars in unforeseen costs. These applicants are especially at more risk of being denied licenses after months of unsuccessful attempts!

This post focuses on some important issues prospective applicants need to consider before applying for a New Liquor Sales License with the AGCO. While this post will discuss the major cost and timing issues associated with a liquor license application, it is not meant to discourage businesses from applying. Rather, applicants should take careful time to plan, budget and consider hiring professional services to ensure their application runs as smoothly as possible.

NOTE: This post will focus only on the Liquor Sales License. The AGCO offers several other types of liquor licenses depending on a prospective applicant’s needs.

Step 1: Getting Your Application Documents Ready

Are you incorporated? If so, get detailed!

Corporate applicants are required to provide comprehensive disclosure of their business structure. Officers, directors and shareholders with more than a 10% equity stake must complete the Application Form. Additionally, these parties must complete separate Personal History Forms.

The disclosure process becomes increasingly complex if an applicant is part of a larger corporate umbrella. In that case, the AGCO requires a detailed diagram outlining its overall corporate structure, alongside separate Application Forms for a New Liquor License from every other shareholder company.

If an incorporated applicant has several key decision makers and stakeholders, the process of filing proper disclosure documentation can be extremely time consuming. Additionally, corporate applicants must also ensure internal approvals by board and shareholders are complied with before an application is signed.

Floor Plans and Capacity Calculations

The AGCO also requires applicants to provide a Floor Plan Guide. While this can be drawn out by anyone, it is highly recommended that professional drafting be sought out in order to avoid uneducated design flaws. Using an accredited architect or engineer would satisfy this issue while also comply with the AGCO’s requirement for a Capacity Calculation Assignment. The major consideration applicants need to be aware of is the cost of hiring a professional. Depending on the size and scope of the proposed licensed area, prices vary drastically in drawing up and preparing suitable floor plans and calculations.

Step 2: The Application Process- Playing the Waiting Game

New kid on the block? Not in my backyard!

If the applicant’s establishment has never held a liquor license, the AGCO must issue a public notice. The public notice is twofold:

  1. A placard must be clearly posted at the applicant’s proposed establishment for a specified period of time.
    A notice of application will also be posted on the AGCO’s website.
  2. This notice process is intended to inform the public of an applicant’s plan to sell and serve liquor in the community. During a notice period, an applicant’s greatest risk of having the licensing process derailed is through a member of the public filing a Public Objection.

If a member of the community disagrees with the proposed establishment’s plans to sell and serve liquor, the parties must resolve their issues before the licensing process can proceed. If negotiations are gridlocked, the AGCO may schedule a public meeting conference call between the applicant, a Deputy Registrar and the objector to find a solution. In the instance that a gridlock persists, a public hearing before the License Appeal Tribunal will be scheduled to adjudicate the issue.

A Public Objection is dangerous to an applicant’s business. Apart from the obvious issue of creating an undeterminable amount of delay, the cost to remedying a Public Objection creates considerable cost concerns. If an applicant has already started construction on their establishment, there are substantial problems associated with stalling the project, paying contractors, and the potential to have wasted money on a scrapped project. Additionally, hiring legal counsel to assist in litigating the issue is expensive.

Step 3: Sweat the Small Stuff

Pre-Licensing Inspection & Conditions

If an applicant successfully passes the public notice period, an AGCO inspector will conduct walkthrough of the proposed premise. Any inconsistencies mentioned by the inspector must be rectified before a license is granted. The inspector could also attach conditions to the license once granted. These conditions could include imposing earlier closing times, limiting the style of service or implementing security protocols.

Again the cost considerations are a serious factor that applicants need to have in mind. Retaining the services of contractors and developers and continually changing the premise to satisfy AGCO requirements can sideline project timelines. Imposing conditions upon the licensed premise could also alter the applicant’s original business plans and stifle their revenue projections.

Disclaimer: Information made available on this website in any form is for information purposes only. It is not, nor is it intended to replace, legal advice. Contact Chu & Huang Law to discuss a specific legal issue and please note that contacting Chu & Huang Law, on its own, does not create a lawyer-client relationship.

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