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chicken and the egg syndrome

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  • chicken and the egg syndrome

    Hey everyone,

    I just wanted to get a little insight as to how everyone handled the getting of the license.

    As I understand it, you must have a physical location before you get the license. How do you go about getting all the money together to get the lease or buying of the building on the hopes of getting approved by the MAN? I can't think of signing into a $7000 a month lease of a building without the knowledge of having the license wrapped up.

    Just any stories of success would be grand!

    Thanks

    John

  • #2
    "... lease contingent on successful completion of

    Licensing procedure..."

    It's the ol' contingency clause caper. Very useful. Ask your lawer about it.

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    • #3
      I would say call the ATF and local ALE and find out what you need to get a license will differ from state to state and as soon as you know you what you need and if any restrictions on you as the owner then you will be able to descide on your location.

      Cheers,

      Doug

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      • #4
        I feel that it is not so much the Fed, and State officials that determine your approval, it comes down to your city planning department. We had no problems with the Federal or State just as long as we conformed to all the regulations they set-forth, i.e. 500ft from Schools, churches, medical facilities etc.
        It was the City governments we had the most problems with. In fact we had to go to 3 different cities and were rejected until our current home town welcomed us in. we gave the planning department detailed blueprints on the brewery and they outlined all the items they wanted us to change and add to our construction. After that we were confident to go ahead and lease the building.
        We are production only so we did not have to go in front of the city council under a Conditional Use Permit that would get voted on if we were to open a full service tasting and Tap room.
        Go around to all the local businesses and households and talk with the people and get a feel for their support of your project, if you are getting some negative feed back these will be the individuals that will make getting the local approval very difficult.
        Good Luck
        Lance@Jergensenbrewing
        Reno, Nevada/ Adelanto, Ca

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        • #5
          Originally posted by nwcw2001
          Hey everyone,

          I just wanted to get a little insight as to how everyone handled the getting of the license.

          As I understand it, you must have a physical location before you get the license. How do you go about getting all the money together to get the lease or buying of the building on the hopes of getting approved by the MAN? I can't think of signing into a $7000 a month lease of a building without the knowledge of having the license wrapped up.

          Just any stories of success would be grand!

          Thanks

          John
          This is the first of many catch 22's and you will need many documents with contingencies. My understanding is that you can get a license with a lease intent agreement, but what do you need to do in order to get to that point? There are many steps that you need to take first. #1, it helps to have some sort of legal structure. LLC's are easy, cheap, fast, and you can convert them later on down the road to a structure that better meets your needs with the help of a good accountant. #2, you need money. At 7K rent per month, you will need lots of money. My advice would be to look for a cheaper , "B" location maybe around half, or less, that amount. Find the cheapest rent you can and maybe a landlord that needs a tenant. They might work with you more than an "A" location. Location is important but do the math and work backwards to see how much you will need to sell just to pay the rent alone. Most landlords want to do business with larger, established companies, not start-ups. They will want a personal guarantee or some sort of assurance that they will get paid. So let's say you want to sign a 5 year lease. At 7K per month, that is 420,000 of financial backing that they will want to see in your business plan. That is just for the lease. Now you need brewing equipment, FFE, etc. It adds up fast with a retail plan. If you have not started on a business plan then that is what you need to start working on. That will help bring some focus to your business idea and attract potential investors/bank financing, which can then help some of the next pieces fall into place.

          As far as getting approved by federal, state and local agencies, they do background checks on you and any partners that you may have. If everyone involved in your plan has a clean record, your chances of approval are good provided there isn't a problem with the location. They also want to know that the financing comes from legitimate sources.

          Good luck!

          Comment


          • #6
            Opt-out clause

            Here's what we're doing, in general terms.

            Prior to the lease, we met with neighborhood councils (quasi-gov't) and asked for letters of support. This will help smooth over the city zoning administrator later.

            We signed a lease for a space, but we made sure we could opt out after X months. These X months allows us to do the following:
            - Get approval for our alcohol license from the city zoning administrator
            - Raise the additional capital to open and operate the brewery restaurant
            - Finish design and start the permitting process with health and building safety

            I'm more concerned about getting city approval, as I believe state and federal will assume the city knows best, as long as we follow state and federal guidelines.

            If we feel we cannot get all of these things into place after X months, we cancel the lease, but lose our deposit. So negotiate for a low deposit, and negotiate for free rent for sometime after signing the lease.


            Cheers,
            --Jake Tringali

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