How to buy a restaurant in Manitoba: licences, ownership rules and what transfers

Manitoba splits a restaurant’s approvals between public health and the liquor authority. Food safety is run through public health inspectors under the Food and Food Handling Establishments Regulation, which says permits are not transferable. Liquor is licensed under The Liquor, Gaming and Cannabis Control Act by the executive director of the Liquor, Gaming and Cannabis Authority of Manitoba. A buyer deals with both, and the Act has its own rules on transfers and on changes in control of a licence holder. This page covers Manitoba only. For the wider picture, start with buying a restaurant in Canada.

The health permit is personal to the operator

Under Manitoba’s Food and Food Handling Establishments Regulation, and subject to the exemptions in the regulation, no person may operate a food handling establishment unless in possession of a valid and subsisting permit, in a form approved by the minister, issued by the director or a public health inspector. The regulation then states that permits are not transferable between persons or establishments. The seller’s permit therefore does not become yours when the business changes hands. A new operator needs its own.

What the inspector can do with a permit

The regulation says a permit must be posted by the operator in a conspicuous location in the establishment. The director or a public health inspector may withhold issuance of the permit if the establishment is not in compliance with the regulation, and may suspend the permit of an establishment where any provision of the regulation is found to have been violated. Manitoba Health says public health inspectors inspect public eating establishments on a routine and a complaint basis, so a previous inspection history is worth reading before you take over the operation.

Registering as the new owner

Manitoba Health says that for new food handling establishments, or for changing ownership of an existing business, you complete and submit the Food Handling Permit Registration Form, your restaurant menu and a detailed floor plan to your area public health inspector. It also says detailed floor plans with equipment listed go directly to the area public health inspector for review before any construction or renovation. Start that submission early, and keep any renovation plans out of the work schedule until the inspector has reviewed them. Manitoba Health’s page also says that to prepare or sell food to the public in the province you must register your establishment and obtain a permit from your public health inspector before operating, so the registration belongs before the opening date, not after it.

The liquor licence needs consent to move

Under section 24 of Manitoba’s Liquor, Gaming and Cannabis Control Act, and subject to section 24.0.1, the executive director may issue categories of liquor service licences established by regulation that authorize the licensee to sell liquor for consumption in the licensed premises. The Act also provides that a transfer or assignment of a licence is not valid without the executive director’s written consent. Because a transfer is not valid without that consent, the seller cannot complete one on its own. Ask a lawyer whether the consent should be a condition of closing, and ask the authority what it needs from both the seller and the buyer to give it.

If a new liquor licence application is needed

If the deal needs a fresh application rather than a consented transfer, the Act sets out the process. An application must be made in a form approved by the executive director with any prescribed fee, and the executive director may reject it if the information is incomplete, false, misleading or inaccurate. After a satisfactory background investigation of an applicant for a liquor service licence, the executive director directs the applicant to give public notice of the application. That notice is not required if the executive director issued the same category of liquor service licence for the premises in the year before the application. Where notice is given, section 105 lets a person object in writing within 14 days. Ask the authority which route applies to your deal.

Buying shares rather than assets

A share purchase can look simpler because the licence stays with the same company. The Act addresses that route as well: a licence ceases to be valid if there is a prescribed change in control of the holder, unless the executive director approves the proposed change in accordance with the regulations. Ask a lawyer which changes the regulation prescribes, and how to seek the approval before the change takes place. The reverse is also worth testing with the health inspector: the permit rule speaks of persons and establishments, so ask how a change of shareholders in the operating company is treated.

What to ask the seller for

• The current health permit and the most recent inspection reports
• The floor plan on file with the public health inspector and any approvals for past renovations
• The liquor service licence and its conditions, as issued by the executive director
• Any written consents the executive director has already given on the licence
• The menu submitted with the registration, if it is to stay unchanged

BDC’s guide to due diligence lists licences and permits among the legal issues to review when buying a business. To see what is listed, browse restaurants for sale or the Manitoba restaurants for sale pages.