Tips in Buying a Restaurant in Florida

Florida’s large and vibrant economy makes it the ideal launching pad for a restaurant. However, Buying a Restaurant, no matter how seemingly good the deal is, requires that you exercise your due diligence to ensure your new venture is not fraught with costly financial and legal liabilities. Regardless of what sort of restaurant you plan to run, it pays to team up with our qualified business attorneys who can help with the following preparations and examinations.

Avoid Buying a Restaurant With Existing Legal Liabilities

Purchasing a business means you also acquire any unresolved code violations, legal judgments, liens, or other legal liabilities it has. Restaurants are particularly vulnerable in this regard because they must comply with many additional regulations, licenses, and health codes required by the State of Florida. If these issues are not taken care of before closing, they become your burden to bear.

As your attorneys, we can assist you in thoroughly reviewing the public records of the restaurant you are purchasing to ensure it is clear of these liabilities. Alternatively, you can circumvent some of those risks by opting to purchase only the restaurant’s assets, such as the physical venue or inventory, rather than the business entity itself. If you acquire the business through a Florida Limited Liability Company (LLC) or other corporate entity — which as your attorneys we can help you form — you will significantly reduce these risks.

Get Proof of Paid Sales Tax

Florida requires businesses to pay state sales tax, and restaurants are no exception. As with the above-mentioned legal liabilities, any unpaid sales tax will be yours to cover when you purchase the business. Bear in mind that Florida restaurants have a greater likelihood of owing taxes, as many owners will withhold reporting some of their revenue to reduce their tax burden. Therefore, require that the seller furnish an official “Sales Tax Clearance Letter” issued by the Florida Department of Revenue that proves no tax liability remains.

Are You Buying a Restaurant That Serves Alcohol?

Alcohol is a vital source of revenue for many restaurants. The Florida Division of Alcoholic Beverages and Tobacco (FDABT) is responsible for issuing licenses for the sale of alcohol, and its regulatory requirements are very strict — applicants require fingerprinting, zoning approval, and a myriad of paperwork and fees. If your establishment plans to offer alcoholic beverages, you will need to either transfer the seller’s existing license to yourself or apply for a new one. The relevant application is Form ABT-6002, which must be submitted to the local FDABT branch in your area. As your attorneys, we can provide assistance in this complex yet ultimately rewarding process.

Review the Lease Agreement

If the restaurant space is leased, ask for a copy of the existing lease agreement, which will usually require that a sale — and ensuing reassignment of the lease — be approved by the landlord. Every lease is different, but typically you will be required to provide proof that you can pay rent, such as bank statements. Ask for a copy of the existing lease agreement and have an attorney look it over, so you have a clear understanding of the terms and conditions (as well as any errors or potential issues).

Inspect the Inventory

If your purchase agreement includes the restaurant’s inventory, such as equipment and appliances, make sure there is an itemized list of what you will be buying, and that each and every item is thoroughly inspected before closing. In addition to making sure everything is accounted for and in working order, ensure that the inventory is legally owned by the seller and paid off. Any items that are leased should have the lease agreement assigned to you.