Buying a business that sells alcohol can be an exciting investment. Whether you are purchasing a restaurant, café, pub, bar or bottle shop, it is important to understand what must happen to the liquor licence before you take over the business.
Buying a licensed business does not automatically transfer the liquor licence into your name. You may need to apply to transfer the existing licence or apply for a new licence.
Getting this right early can help you avoid settlement delays, unexpected costs and the risk of being unable to sell alcohol after taking over the business.
1. Check the existing liquor licence before signing the contract
Your first step should be to investigate the liquor licence as part of your due diligence.
Ask the seller for a copy of the current licence and check its type, trading hours, authorised activities and any conditions or restrictions. For example, a restaurant may hold an on-premises licence, while a bottle shop generally requires a packaged liquor licence. Hotels, small bars and general bars have different permissions.
Do not assume that the existing licence will allow you to operate the business exactly as you intend. Check whether it permits your proposed trading arrangements, takeaway sales, extended hours or any other planned changes.
You should also investigate whether the licence is subject to compliance issues, disciplinary action or restrictions that could affect the business’s value or future operation.
2. Decide whether to transfer the licence or apply for a new one
For many business purchases, transferring the existing liquor licence is the most practical option.
Transferring an existing licence
Liquor & Gaming NSW provides a process for transferring a liquor licence when a licensed business is sold. Where the seller cooperates, the purchaser can generally apply with the seller’s written consent.
The application requires relevant information and supporting documents. Depending on the circumstances, these may include identification, a recent National Police Certificate, evidence of Responsible Service of Alcohol (RSA) qualifications and company information if the purchaser is a company.
A transfer does not become effective until Liquor & Gaming NSW grants provisional approval. The official guidance indicates that provisional approval is usually provided within 10 business days after a complete application is lodged, with final confirmation generally occurring about 60 days later.
Applying for a new licence
A new application may be appropriate if the existing licence cannot be transferred or does not suit the proposed business. A new licence may also be necessary where you intend to operate a different type of business or introduce activities that require different licensing permissions.
The process can involve additional documentation, council development approval, notification requirements and consultation. Depending on the application, objections or requests for further information may extend the timeframe.
You can check the current requirements through the NSW Government’s liquor licence application guidance.
3. Check planning and council approvals
A liquor licence is not a substitute for planning or development approval.
Before committing to the purchase, check whether the premises has the necessary council approval for its existing use and the proposed liquor-related activities. This is particularly important if you intend to change the business model, extend trading hours, add outdoor seating or introduce takeaway alcohol sales.
For example, a restaurant’s existing approvals may not necessarily cover a proposed change to a bar or bottle shop. Confirm that the proposed activities are permitted before relying on the existing licence.
4. Understand RSA and training requirements
Responsible Service of Alcohol is an important part of operating a licensed business in NSW.
You should check which training and competency requirements apply to you, your managers and staff. The requirements depend on the licence type and the role each person performs. Some licensees and managers must also complete specific licensee or advanced licensee training.
Do not assume that the seller’s qualifications or arrangements automatically satisfy your obligations. Make sure the necessary training, competency cards and management arrangements are in place for the takeover.
5. Coordinate the licence application with settlement
Timing is critical when buying a licensed business. Your business purchase contract may require settlement on a particular date, but the licensing process may not be complete by then.
Speak with your solicitor early about the proposed settlement date and the steps required to transfer the licence. The contract should be reviewed to determine whether it needs provisions dealing with the seller’s cooperation, the licence application, approval delays or the consequences of an unsuccessful application.
You should also consider what happens if the licence cannot be transferred in time or if approval is refused. Depending on the circumstances, you may need to negotiate an extension, reconsider the transaction or exercise a contractual right if one is available.
Do not assume you can sell alcohol immediately after settlement simply because the seller previously held a licence. Confirm the applicable approval requirements before trading.
6. Obtain legal advice before committing
A solicitor can help you review the business sale contract, identify licensing risks, consider appropriate contractual protections and coordinate the purchase timetable with the licensing process.
Early advice can be particularly valuable if the seller is unwilling to cooperate, the licence has unusual conditions or you intend to change how the business operates.
Buying a licensed business in the Blue Mountains?
If you are purchasing a restaurant, café, bar, bottle shop or another licensed business in the Blue Mountains, careful preparation can help protect your investment and reduce the risk of delays.
Mid Mountains Legal, located in Lawson in the Blue Mountains, can assist with the legal aspects of buying a small business and help you identify issues that should be addressed before you commit to the purchase.
Here to Help
Contact us now for free, no-obligation telephone advice about buying a business and the legal steps involved in your proposed purchase.
