You want to open a restaurant in one of the over five hundred municipalities in New Jersey and you would also like to serve wine, beer or other alcohol in your new restaurant. It sounds simple, but regulations and costs can make the idea of serving alcohol in a restaurant somewhat daunting. It does not have to be daunting, as long as you understand the process and are aware of the potential pitfalls.
New Jersey, like many states, has historically heavily regulated liquor licenses. While the license process can be intimidating, this is not the fault of municipal clerks, governing bodies, or the New Jersey Division of Alcoholic Beverage Control, who are all doing their respective jobs and doing them well. Odds are that if the business decision is made that selling and serving alcohol is worth the price of the license, you will face extremely stiff competition to buy that license, if you can find one available, as the number of licenses in a municipality is limited by population.
Once a prospective licensee has identified
an available license to purchase, has survived the bidding war for the license and has negotiated a contract with condition on approvals, the prospective licensee must then commence the application process. A twelve- page retail liquor license application must be prepared and led with the municipal clerk. The application seeks information including, where the license will be used, and a sketch/ diagram of the proposed licensed premises. Additional information is required regarding the background of the entity and/or the individual(s) who will have an interest in the license. There are multiple questions related to general background but once the application is led, an extensive background investigation takes place. It is during this background check that bank statements, tax returns and personal information are produced, along with fingerprinting. Generally, the process can take between ninety to one hundred eighty days to complete and includes receiving a tax clearance certificate related to the Seller. Once the investigation is clear, multiple notices must be published and then the matter can go before the municipal governing body for approval.
The New Jersey Division of Alcoholic Beverage Control publishes a handbook for licensees with answers to the many day-to-day questions a license holder may have. Being able to serve alcohol in your restaurant has some clear benefits but the cost of the purchase and the time involved in handling the alcohol must be properly assessed. If mistakes are made, the penalties can be high. There is some talk of the legislature changing how licenses are made available and how many are available but, in the meantime, the cost to buy one continues to go up.
In many municipalities, such as Paramus and other towns in Monmouth and Passaic Counties with heavy retail development, licenses can exceed one million dollars to purchase. While there are some municipalities in Hudson County and more urban locales that have had licenses transfer for less than a hundred thousand dollars, it is becoming more competitive even in these locations. In heavily populated retail areas, mall operators and developers try to buy as many licenses as they can, which is why counsel is needed to work through the process, alleviate the potential pitfalls in the regulations, and to help you have a restaurant where you can serve wine, beer and other liquor.