How do I buy a cafe in Canada?

If you want to buy a cafe, the sale price is only part of what you have to settle. Before you commit, you have to know whether you can lawfully operate it once you take over. In the provinces and territories checked for this guide, food premises are regulated through public health authorities, so what you need depends on where the cafe is. This guide takes the checks in the order a buyer meets them: the permit, what the rules require of whoever runs the premises, and the lease and other agreements that make the location workable. It does not cover price, equipment or the staff you may hire.

Start with the permit in your province

The rule differs across Canada. Manitoba says anyone who prepares, sells or distributes food to the public must register the food handling establishment and obtain a permit from the public health inspector before operating, and its page says that for a new establishment or a change of ownership of an existing business, you submit the Food Handling Permit Registration Form, your menu and a detailed floor plan to your area public health inspector. The Northwest Territories says all food establishments must have a valid Food Establishment Safety Permit posted, obtained after an application and a satisfactory inspection. Ask your local public health unit what applies to you.

Know the duties of the operator

In Ontario, the food premises regulation, O. Reg. 493/17, places duties on every operator of a food premises. It says the operator must ensure that the results of inspections by a public health inspector are posted as the inspector requests, and that, for a food service premises, at least one food handler or supervisor who has completed food handler training is on the premises during every hour it operates, subject to an exemption in section 3.1 for some premises that prepare or serve only low-risk or pre-packaged food. Once you buy, those duties are yours. The regulation also requires the operator to keep records of food purchases on the premises until at least the first anniversary of the purchase, and records of pest control measures for at least a year after they are made. Ask the seller for the most recent inspection results and for the existing records, and check that someone on your team will have the training. If your cafe is in another province, find the equivalent rule before you rely on any of this.

Confirm the lease and permits can be assigned

BDC’s guidance on due diligence tells buyers to make sure key contracts, such as leases, regulatory agreements and customer contracts, can be assigned to them if necessary. For a cafe, read the lease for the term left, the landlord’s consent requirements and any rights of renewal. Ask whether other permits, such as a sign permit or a liquor licence if the cafe has one, can move to you or must be applied for again.

Find out who actually runs the cafe

BDC asks buyers to consider who is actually running the business day to day, whether that is the vendor or key employees who will stay after closing, and whether customers leave when the vendor does. A cafe makes the question concrete. Spend a morning there before you make an offer. Watch who opens, who handles the regulars, and who makes the decisions about ordering and staffing. Ask which employees would stay, and whether the seller will work alongside you for a handover period. The answers tell you what to plan for in your first weeks of running it.

Ask what the seller may not mention

Whatever the seller tells you about the cafe, ask the questions that fill in the rest. Ask for the permit and the last several inspection reports, any orders or notices from the health authority, and the equipment and supplier agreements that stay with the business. BDC also lists key customers, suppliers and employees among the things to look at, and asks whether the customers leave when the vendor does. For a cafe that depends on one owner behind the counter, find out how much of the regular trade comes from that person.

A short checklist before you make an offer

• Ask the local public health unit what you must file as the new owner, and how long it takes, before you agree on a closing date.
• Request the current permit and recent inspection results, and read what the inspector flagged.
• Have a lawyer read the lease for assignment, landlord consent and renewal rights.
• List every licence and permit the cafe holds and ask the issuing body whether each transfers or must be reapplied for.
• Write the permit and lease approvals into the offer as conditions, so you are not bound if either is refused. Ask your lawyer how long the conditions should run, and what you can do while you wait, such as booking the lease discussion and the health unit’s visit in the same week.