The reasons why you should not always buy an existing liquor license.

Prospective liquor license holders often wonder what is better: Buying an existing liquor license or going through the application for a new license?

The Misconception

Many people are under the impression that when they buy a current liquor license they can start trading immediately.

The Reality

This is not the case, as a matter of fact when you buy an existing license it is only valid for the premises the liquor license was issued for. This mean that buying an existing liquor license is only worth your while when you will be trading in that particular premises.

New or existing License

Buying an existing license

In the case where you buy an existing license to trade on the same premise, the license must be transferred to your name. At this point it is easier to buy, in comparison to applying for a new liquor license. The licensed premises is already approved, meaning that only the person needs to qualify.

Remember: A liquor license is granted on two (2) basic criteria, namely the premises and the person proposed to hold the license. In that case it is easier when the premises is already approved.

Buying a license to use on a different premises

Buying a liquor license when you are going to trade on a different premises does not make any sense. By buying an existing liquor license to use on a different premises makes double work, cost and time. To use the purchased liquor license, you have to start with the application to transfer the liquor license to your name.

That is not where it ends. After the timely process of applying for, and getting the license approved to your name, you have to start a new process, before the license will be legal for use. The second, timely process is to yet again apply for the approval of the correct premises.

Delays in the application process.

There are a number of factors involved in the application process, all of them can  influence the liquor license application in such a way that may prolong the granting of the removal of the existing liquor license. Two of the most common influencing factors are as follows:

  • First of all the transfer usually takes anything between three (3) and six (6) ¬†months. Then the following years renewal must be approved before the procedure to remove the license to the new premise can take effect. If approval are not done, it can cause another delay that lasts up to six (6) months.
  • The removal application forms and process is very similar to the application for a new liquor license. This mean the application must then follow the same route as a new liquor license application, including the advertising and inspections.
  • Time becomes a big factor, this way you are looking at the entire process taking from six (6) to eight (8) months.

Conclusion

By buying an existing license and then start the transfer to your name and secondly removing the bought license to a new premises can take up to twenty (20) months. When comparing the above mentioned facts to those of a new liquor license application, you will quickly see that the new application should not take more than eight (8) months.

Secondly, it is proven above that the cost factor becomes a big issue. Besides the consulting costs and paying for the license, you end up having to pay for two (2) applications. Going this route works out to be three (3) times the cost of a new liquor license application.

The granting of the removal, follows the same route as a new liquor license application and the criteria is the same. This means the chances for the removal and transfer of the license to be successful, is exactly the same as applying for a new license.

It must be clear now that there exists no valid reason to buy an existing license when your waiting time to trade will be much longer and the costs much more than a new application. In the end there is no difference in the outcome of the Liquor Authority’s final decision.

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