Licenses, Inventory, & Closing Escrow
This is the final section of a three part series on the eight step selling process. If you missed the first two parts please look at our two most recent Restaurant Raps, the 2004 Third Quarter Issue which discussed:
1) receiving the offer, 2) responding to the offer, 3) acceptance of the offer and 4) removal of contingencies and the 2004 Fourth Quarter Issue which discussed the escrow process in depth.
The final steps in the eight step selling process are as follows: 1) obtaining licenses and setting up tax accounts, getting insurance in place, etc, 2) transferring licenses, 3) taking inventory and 4) closing escrow.
1. Obtaining Licenses, Setting Up Tax Accounts, Getting Insurance In Place, etc.– The buyer needs to apply for the following: a) resale permit from the State Board of Equalization, b) an affidavit of Fictitious Business Name with the county clerk, c) Business License with the local governmental office and d) an Employer’s Tax Identification Number with the State of California Employment Development Department. Also the buyer is to get his liability insurance in place and arrange to have the utilities changed to his name at the close of escrow.
2. Transferring Licenses – The ABC (Department of Alcoholic Beverage Control License) is transferred
during the escrow process and we handle this process which normally takes about 6 to 8 weeks. We work closely with the buyer and ABC investigator through the entire process to assure that the license will be transferred in an expeditious manner. If there is a club sale there are other licenses such as entertainment licenses and dance licenses which need to be transferred and if there is a brewpub sale there are special alcohol manufacturing licenses which need to be transferred which we handle as well. Also if there is a franchise sale we need to get the approval of the franchisor of the proposed franchisee.
3. Taking Inventory – If salable inventory (food, beverage, cleaning and paper supplies) is being
transferred a physical inventory is taken by the buyer and seller immediately before the close of escrow. Salable inventory is paid to the seller at sellers cost in addition to the purchase price. An inventory of the fixtures and equipment is also taken by buyer and seller immediately before the close of escrow to assure that all the inventory indicated on the inventory list given to the buyer when the purchase contract was executed is there. Also the buyer checks all the equipment immediately before the close of escrow to assure that it is in good operating condition
4. Closing Escrow – Once all of the above items are complete the buyer calls us and tells us he is ready to
close escrow and we call the title company and tell them to close escrow. We instruct the seller to give the buyer the keys and instruct the buyer to immediately change the locks.
After closing nearly 400 escrows Restaurant Realty Company is very qualified to work with you through the eight step selling process and we look forward to providing you with our professional services.