How to buy a liquor store or licensed bar in Ontario: licences, ownership rules and what transfers

Buying a licensed bar or liquor-selling business in Ontario means dealing with the Alcohol and Gaming Commission of Ontario (AGCO), the provincial regulator that issues and transfers liquor sales licences. A transfer is subject to the AGCO’s approval, and the AGCO’s own guide, Section 7, sets out when a transfer is needed. The licence is not a general permission attached to the business. It is issued to a particular person for a particular place, and a sale can change that person. This guide describes Ontario only and follows what the AGCO says about transfers.

Who regulates liquor sales in Ontario

The AGCO says all liquor sales licences are issued to individuals, business partnerships or corporations, for operation at a specific location. That wording shapes a purchase. A buyer is not acquiring the seller’s licence as an asset the way equipment changes hands. The buyer is asking the regulator to let a different person, or a changed ownership group, operate at that address. The AGCO’s page on managing a licence says the licence can be transferred to someone else provided the regulatory requirements are met, subject to the AGCO’s approval.

When a transfer is required

The AGCO says a transfer is required if there is a prescribed change of ownership of a business carried on under a licence, if the licensee changes, or if a different person wishes to acquire the licence. The person taking over applies as the transfer applicant, and the guide says both the licence holder and the transfer applicant must sign the transfer application. Read the guide itself for the list of prescribed changes and for any conditions attached to each. Treat a purchase of shares as a possible trigger rather than a way around the process, as the next section explains. If the structure is complicated, ask the AGCO how it applies to your deal.

Why a share purchase does not avoid the process

Buying shares may look as though it leaves the licensee untouched, so that nothing needs transferring. The AGCO’s guide addresses that. Among the prescribed changes it lists a person or partnership acquiring a beneficial interest in the licensed business, including acquiring shares of a licensee that is a corporation or of a corporation that effectively controls the business, where the person or partnership ends up holding or controlling the share level the guide sets. Check the guide for that level instead of assuming a small stake sits outside it. In an asset purchase the licensee itself changes, which the guide also lists as a reason a transfer is required.

Director changes, short-term transfers and refusal

Some changes are lighter. If an individual ceases to be an officer or director of a corporate licensee, or a partner ceases to be a partner, the licensee may continue without a transfer if it gives the Registrar notice within 30 days after the change. The Registrar may also transfer a licence to operate a liquor consumption premises for not more than one year in stated cases, such as when a trustee in bankruptcy or court-appointed receiver acquires the business, or a mortgagee, franchisor or landlord takes possession of the licensed premises. The AGCO adds that a transfer will not be approved, in most instances, if the current licensee has an outstanding monetary penalty or if the recipient would not be eligible for a licence. The guide also says that if either the current licence holder or the transfer applicant owes money to the Ministry of Finance under the Retail Sales Tax Act or the Liquor Tax Act, the transfer application cannot proceed until the debt is resolved, and that an applicant who intends to operate during the transfer process must apply for an Authorization to Contract Out.

Retail stores are managed separately

The AGCO handles convenience store and grocery store licences on a separate page, with their own steps to change, renew or transfer. If the business you are looking at sells alcohol at retail rather than serving it for consumption on the premises, confirm which type of licence it holds before you read any transfer rule. The national guide on buying a liquor and beer retailer gives the national picture. Current listings are on the liquor stores for sale and Ontario pubs for sale pages.

What to ask the seller for

Ask for documents that show who the licensee is and whether anything stands in the way of a transfer. The seller can answer most of these; the AGCO decides the rest.

• A copy of the current liquor sales licence, showing the licensee’s name and the address it covers
• A written statement of any monetary penalty or enforcement matter outstanding against the licensee
• Current officer, director or partner information, and the dates of any recent changes that were reported to the Registrar
• The corporate structure, including any corporation that effectively controls the licensee, so you can see whether a share purchase counts as a prescribed change
• Confirmation that the seller will close the payroll account if the business has employees, and contact the tax services office to close any GST/HST account, as the Canada Revenue Agency says a seller must