What Licenses Do I Need to Start a Restaurant Business?

by Joe Taylor Jr., Demand Media
Unlike other kinds of businesses, restaurants require highly complex and detailed licensing. The kinds of licenses and inspections can vary significantly from town to town and from state to state. For instance, some areas of the country require only basic business licensing for owners to launch restaurants. Other towns may force restaurant owners through seemingly endless parades of zoning hearings and on-site inspections before granting approval.

Business License

As with any business, a new restaurant must exist as a legal entity at the local, state and federal level. Even when registered as a corporation with both the IRS and a state Department of Revenue, a restaurant must comply with local business licensing guidelines. This sometimes means registering a trade name at city hall, while other situations require more complex licensing.

Food Handling and Safety License

Some states and cities require restaurant owners and managers to complete mandatory food handling and sanitation training before earning the privilege of serving the public. In some towns, food handling licenses require a combination of classroom certification and on-site inspection. Many restaurant owners prefer to certify multiple staff members, since at least one certified professional must remain on-site during operating hours.

Related Reading: How to Register a License for a Restaurant Business

Building License

Fire commissioners often issue occupancy licenses or other building licenses that verify a location’s operational safety. Earning a building license requires maintaining clearly marked and working fire extinguishers, fire escapes and emergency exits. Some towns may also require evidence a building can sustain the impact of an earthquake, a tornado or a flood.

Liquor License

Requirements for a liquor license, the most important license for some restaurant owners, can vary wildly from town to town. In some parts of the United States, applicants need only prove they own a restaurant to qualify for a liquor license. Other communities may cap the number of available licenses in a neighborhood or on a block, making it impossible for a restaurant to serve alcohol unless a nearby competitor closes or sells the rights to his license. In most cases, restaurant owners must prove their lack of a criminal record and their adherence to ordinances.

Cabaret License

Restaurants with live music must frequently apply for an additional license, often called a cabaret license. Even if “cabaret” doesn’t fit the description of an upscale restaurant with a jazz trio, the presence of live musicians forces owners to adhere to common rules about patron and performer safety.

Music License

Whether restaurants feature live or pre-recorded music, they must obtain licenses from at least one of the nation’s three most prominent music clearinghouses. BMI, ASCAP and SESAC all monitor music performances in public venues, distributing license fees to songwriters. Obtaining licenses from all three can eliminate worries that a particular song could trigger expensive penalties.

Franchise or Trademark License

New restaurant owners fall into one of two categories: owners who have franchised a concept or even a brand name from an intellectual property clearinghouse, and owners who have created their own brand from scratch. Both kinds of owners require specific licenses. A franchisee often contracts directly with a franchising company for the rights to trademarks and service marks, but must still comply with any local licensing requirements on their use. This may mean registering a subsidiary “trading as” or “T/A” business entity with state or local officials. Independent business owners should also conduct a thorough trademark check, especially if their concept could eventually move across state borders. In some cases, restaurant owners may have to reach agreements with similarly named companies in other industries before investing in signage or marketing efforts.
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