Restaurant for sale – What happens to the LICENCE IV when you sell a bar – café – restaurant?
You want to buy or sell a bar/café/restaurant, and you’re wondering what happens to the Licence IV during the transaction? Owners of a bar/café/restaurant who wish to sell alcohol on a principal or ancillary basis must hold a specific license. When the business is sold, the buyer must take steps to obtain this license. In this article, we’ll describe the different types of liquor license, and then explain how the buyer of a bar, café or restaurant can continue to sell alcohol under this license.
First of all, it should be pointed out that ALL owners of establishments selling alcohol, whether for consumption on the premises or for takeaway, must have a liquor license. This applies not only to bars, nightclubs and restaurants, but also to hotel-restaurants, wine merchants, supermarkets and retailers selling by mail order or over the Internet.
What are the different types of liquor license?
There are several types of licenses, depending on the alcohols they authorize the sale of, but also on the establishments they concern.
What type of license is required for a bar or brasserie?
There are two main categories of licensed premises, depending on the type of alcohol offered for sale.
License III (or “restricted license”)
Licence III authorizes the sale of category 1, 2 and 3 beverages:
- Non-alcoholic beverages;
- Non-distilled fermented beverages (wine, beer, cider, perry, mead);
- natural sweet wines;
- Crème de cassis;
- Fruit or vegetable juices containing up to 3° alcohol;
- Liqueur wines;
- Wine-based aperitifs;
- Fruit liqueurs containing less than 18° alcohol.
Licence IV (or “grande licence”, or “licence de plein exercice”)
The Licence IV authorizes the sale of all beverages in categories 1, 2 and 3 (above), as well as 4th and 5th category beverages, i.e. :
- Distilled spirits;
- Sweetened liqueurs;
- All other alcoholic beverages (except those prohibited from sale).
Licenses III and IV allow consumption on the premises, without accompanying food. They also authorize takeaway sales of the corresponding beverages.
Which licenses for restaurants?
Restaurant owners wishing to sell alcohol as an accompaniment to meals, and only during main meal times, also need a specific license.
As with drinking establishments, restaurant licenses are divided into two categories, depending on the type of alcohol to be sold.
“Small License restaurant”
The “Petite Licence Restaurant” allows the sale of group 1, 2 and 3 alcoholic beverages, for the main meals and as an accessory to food. It therefore authorizes the sale of the same alcoholic beverages as the above-mentioned License III.
The “Restaurant License” authorizes the sale of all categories of alcohol, with no limit on alcohol content, during meals and as an accessory to food. It therefore authorizes the sale of the same alcoholic beverages as the “Licence IV”.
If the establishment wishes to sell alcohol outside main meals (bar-restaurants), it needs a type III or IV liquor license in addition to its restaurant license.
Otherwise, there is no point in combining a liquor license and a restaurant license, since the former also permits the sale of alcohol as part of a catering activity.
What happens to a business’s liquor license after a sale?
When a business is sold, the restaurant or public house will retain the same activity, but with a new owner or manager. This means that the license must be transferred from the previous owner to the new owner, even if the license is transferred with the business.
What is a business license?
In order to obtain a restaurant or public house license to sell alcoholic beverages, the purchaser of the business must complete a 20-hour training course. This is given by an approved organization and covers the prevention and control of alcoholism, the protection of minors, and the repression of public drunkenness. The course also provides the future manager with a basic understanding of drug legislation and the principles of civil and criminal liability.
At the end of this training, the future operator will receive a business license, valid for 10 years and renewable by completing a further 6-hour training course.
Who has to carry out the transfer formalities, and what are they?
The transfer of a liquor or restaurant license must be made by the person who intends to benefit from the license, and not by the former operator.
This transfer is governed by article L3332-4 of the French Public Health Code, which provides that the future operator of an establishment of this type must, 15 days before the event (the transfer), make a declaration to the town hall (OR to the Paris police prefecture, if the establishment is located in Paris), in the form of CERFA form no. 11542*05, available online.
In addition to the form, the new owner must provide the town hall (or the Paris prefecture of police) with the previous receipt for the opening of the license, as well as the operating permit, which must be obtained prior to the declaration.
CAUTION: Article 1333-1 of the French Public Health Code provides that if a 3rd or 4th category liquor license has not been used for 5 years, it becomes null and void, and cannot be transferred. However, if the establishment has been closed by administrative decision (e.g. bars and restaurants during the COVID-19 crisis), the 5-year period is interrupted.
It is therefore very important for the seller of a bar or restaurant to check that the license to sell alcoholic beverages is valid before transferring the business.
You now have all the information you need about liquor licenses, and what happens to them when you sell a restaurant or public house. As the future vendor, it’s important to check that your license is still in use, and can be used after the transfer, and as the buyer of the restaurant, bar or café, you need to take all the necessary administrative steps before you can benefit from the establishment’s license.
Would you like more information or advice on selling your business? Use our online procedure. A lawyer in your area belonging to the AGN network will deal with your question, and provide you with an answer, or support, depending on your needs. Do not hesitate to contact us by phone or e-mail, or schedule an appointment online at www.agn-avocats.com.
AGN AVOCATS – Sales of business Department
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