Management and Concession Agreements in the Alcoholic Beverage Industry
One of the key advantages of a Management Agreement in the retail sale, service, and delivery of alcoholic beverages is that it allows for seamless business transitions while maintaining regulatory compliance. When a purchaser acquires the assets of a bar, nightclub, restaurant, or other business licensed by the Texas Alcoholic Beverage Commission (TABC), they may temporarily operate under the seller’s existing license or permit while their own TABC application is pending.
This arrangement, known as an Interim Management Agreement, enables the purchaser to legally purchase, sell, serve, and deliver alcoholic beverages under the authority of the seller’s permit for a limited period. In return, the purchaser typically compensates the seller with a portion of the gross profits as a management fee. However, during this transition, the seller must retain ultimate control over alcohol-related operations to comply with TABC regulations, while the purchaser oversees daily management responsibilities. Once the purchaser’s TABC license or permit is approved, the seller’s permit is surrendered for cancellation, and the new license is issued to the purchaser, ensuring a smooth transfer of operations.
What are the Types of Agreements?
Management Agreements for Licensed Retail Locations
Retailers may also utilize Management Agreements when the owner or lessee of a licensed establishment wishes to delegate operational control to a third-party management company. In these cases, the license or permit holder contracts with a management company to handle day-to-day business operations, typically in exchange for a fixed management fee or a percentage of the gross profit. These agreements offer flexibility and can be tailored to meet the specific needs of both parties while maintaining compliance with TABC regulations.
Concession Agreements for Alcohol Service at Third-Party Venues
A Concession Agreement allows a TABC-licensed business to operate at a location owned or leased by a third party, such as a hotel, stadium, public entertainment venue, or event center. This type of agreement is often used in conjunction with a Management Agreement, depending on whether the concessionaire’s employees or the venue’s employees will be responsible for alcohol sales, service, and delivery. Concession Agreements help streamline alcohol service in high-traffic venues while ensuring compliance with TABC licensing requirements.
Expert Assistance with Management and Concession Agreements
For businesses navigating the complexities of Management and Concession Agreements, it is essential to ensure compliance with TABC regulations while structuring agreements that align with operational and financial goals. If your business requires a tailored agreement or you need guidance on regulatory compliance, seeking professional assistance can help protect your business interests and facilitate a smooth operational transition.
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Management & Concession Agreements FAQ
What is the purpose of a Management Agreement in the alcohol industry?
A Management Agreement allows a third-party operator to manage the day-to-day operations of an establishment that holds a Texas Alcoholic Beverage Commission (TABC) license or permit. It is often used when a business is sold, and the new owner needs to operate under the existing license temporarily or when a license holder wants to contract a management company to run the business.
How does an Interim Management Agreement work when buying a licensed business?
An Interim Management Agreement enables the purchaser of a bar, nightclub, or restaurant to legally operate under the seller’s TABC license while their own license application is pending. The seller must retain ultimate control over alcohol-related operations, while the buyer manages daily business activities and typically pays the seller a percentage of the revenue as a management fee.
Why are Management and Concession Agreements important for regulatory compliance?
These agreements help businesses navigate TABC licensing laws while ensuring smooth operational transitions. They provide a legal framework for third-party management or off-site alcohol sales, protecting businesses from violations, penalties, or delays in obtaining the proper licensing.
