How do I buy a convenience or grocery store that sells alcohol in Ontario?

An Ontario convenience or grocery store that sells beer, wine, cider or ready-to-drink beverages does so under a licence from the Alcohol and Gaming Commission of Ontario, known as the AGCO. That licence is the first thing a buyer should ask about: the AGCO says it is issued for a specific store location, and that a transfer is required if a different person wishes to acquire it. If you are buying the store and will be a different person from the licensee, the question is not whether you will own the shelves and the lease. It is whether the regulator will let you take over the licence, and in what order the steps have to happen. This guide covers that sequence and two other checks that belong in the same purchase.

The AGCO licenses the sale of alcohol in these stores

The AGCO’s page on selling alcohol in convenience and grocery stores sets out what is involved in legally selling alcohol in them. Treat the existing licence as something to verify rather than assume. Ask the seller for a copy of the licence and any conditions attached to it, and ask whether the store has reported every change to its business that the AGCO requires. A store that has not kept the AGCO informed may have problems of its own to fix before a transfer, and you want to learn that before you are committed to a closing date.

A different owner means a licence transfer

The AGCO’s guidance on managing a convenience store or grocery store licence says a transfer of licence is required if a different person wishes to acquire the licence. It says the licence can be transferred to someone else provided the regulatory requirements are met, subject to the approval of the AGCO, and that the person interested in taking over the licence will need to submit the transfer application. So the application is yours to prepare, not the seller’s. Its renewal checklist also asks for confirmation that a change of owners has been reported to the AGCO and says that, if it has not, a licence transfer must be applied for first.

Who has to disclose personal information

The AGCO asks for personal disclosure information from individuals associated with the business entity who have, or will have, decision-making authority or supervisory responsibility for the sale of alcohol in the store. Its guidance names sole proprietors, partners in a partnership, and officers and directors of a corporation. If you buy through a corporation, work out in advance who those people will be and get them ready to complete the disclosure. If a new individual with that authority joins later, the AGCO guidance says that person must also give personal disclosure and the change in ownership structure must be reported.

Report changes and keep the registry current

The AGCO says licensees are required to notify it of any changes to their business, including changes to the ownership or management. A buyer should plan for that notice as part of the handover and not as an afterthought. Separately, the Ontario Business Registry lets businesses and not-for-profit corporations complete over 90 transactions online, including registering and updating their information, so check that the entity on the registry matches the entity named on the licence and on your purchase documents.

Treat the licence as a closing condition

Because the transfer needs AGCO approval, a buyer should avoid committing to a firm closing without it. Make approval of the transfer a condition of the purchase, and agree what happens to the deposit if approval does not come. Ask whether the store’s other arrangements, such as supply terms, depend on the licence staying in force without a gap. The convenience store guide covers the wider business review, and this page covers only the alcohol side.

Who signs what

Because the person taking over submits the transfer application, the buyer’s lawyer should prepare it with the seller’s cooperation. Ask the seller to hand over the licence documents and to confirm in writing that the AGCO has been told of any earlier changes. If the buyer is a new corporation, make sure it exists, and is correctly registered, before the application goes in, and ask the AGCO which entity the application should name.

Ask WSIB for a purchase certificate

WSIB says that if you are buying a business’s assets, you should get a purchase certificate, and that you must request it from WSIB before the date of sale. Without a valid certificate, WSIB may hold the purchaser liable for all amounts owed by the vendor up to the date of sale. WSIB also says a purchase certificate is valid for 30 days from its date of issue and is not required when you are buying shares, because no new legal entity is created.

• Ask for the licence, its conditions and the seller’s correspondence with the AGCO, and compare the named licensee with the entity you are buying from.
• Decide who will submit the transfer application and who must provide personal disclosure, then draft the purchase agreement around the AGCO’s approval.
• Request the WSIB purchase certificate before the date of sale if you are buying assets.
• Confirm that the Ontario Business Registry information matches the licence and the sale documents.