Prince George’s County Liquor Board Seeks 5 New Members, Cancels Upcoming Hearings

The Prince George’s County Liquor Board, which is already down to three members due to the resignation of its chairman (following a guilty plea in a DUI matter) and another member (following a bribery arrest) will get an entire new membership later this year.  Pursuant to legislation passed in the recent 2017 Maryland General Assembly, the Board last week published a notice seeking applications for these members.

On that same date, the current members of the Board voted to cancel the upcoming hearings scheduled for June 27, July 12, and July 25, inviting the question of whether there will be any liquor board hearings at all until the new members are seated.  As the Board is required to approve all new and transfer liquor license applications, that will mean no new liquor licenses can be issued in Prince George’s County until at least August, and quite possibly later than that.  Not being able to issue any new licenses during the summer months is, of course, not a good look for the County, which is touting its development boom and holding itself out as an alternative to high-priced Montgomery County and areas of Northern Virginia.  This delay and overhaul will not help those efforts, at least in the short term.

It has been a difficult few years for the liquor board in Prince George’s County.  In addition to the well-publicized arrests noted above, in 2015, the former chairman of the Board  to the new chairman appointed by (at the time) incoming Governor Hogan.  This led to chaos at at least one hearing (of which I was in attendance), and the cancellation of multiple scheduled hearings before the the controversy was finally resolved.

The current members of the Board (as well as its fantastic staff) are conscientious public servants who probably deserve better, but so do the people of Prince George’s County.  Here’s hoping that this overhaul (and increase in oversight) can get the Board back on track.  Prince George’s County is becoming more attractive to national and local restaurant chains (we’ve finalized several leases there just in the last couple of weeks), so a functional liquor board is vital to demonstrating that the County is someplace businesses should want to invest.

New Restaurant Location? Strongly Consider a New LLC.

I often say that opening a restaurant is like becoming a parent.  It keeps you up late at night, it occupies most of your time and attention, it makes you worry whenever you leave it with someone else…. But like parenthood, restaurant ownership can also get easier over time. And, when it does, you may actually start thinking, “hey, I’m beginning to get the hang of this.” If you are lucky enough for that to happen to you, you may also think like the parents of a moderately behaved toddler – “maybe it’s time to think about number 2.”

That decision (as related to restaurants, at least for these purposes) is fraught with many more issues than I could ever cover in one blog post.   So I will allow this post to cover only one such issue – whether you need to create a new entity for the new location. My answer, in almost all instances, is a resounding “Yes.”

The main reason is this: you will need to sign a new lease for your new location. And, with that new lease, comes another set of significant obligations and financial liabilities. If you don’t create a new entity, not only will your new restaurant be responsible for those liabilities, so will your first one. That is to say, if the new restaurant flops and goes out of business, but the first one is continuing to do well, failure to form a new entity can allow the Landlord for location Number 2 can go after the bank accounts and assets of location number 1. In short, Number 2’s debts can bring down Number 1 along with it.

If you create a new entity, however – call it McSwiggen’s Ale House Number 2, LLC – only the assets of that entity will be available to satisfy any liability under that Lease. The assets of McSwiggen’s Number 1 LLC will be protected by laws of limited liability (that’s what the two L’s in LLC stand for, after all). Yes, of course, you personally may be on the hook for any personal guaranty on Number 2’s lease, but the first restaurant – the one that was doing so well that it caused you to think about Number 2 in the first place – will still have the chance to live to fight another day.

To use a different analogy from the one I started with, you can build your restaurant business like an apartment building or a suburban subdivision. And if you think of your restaurants like that, think of financial difficulty like a fire. If you use the same LLC entity for each new location, financial difficulty in one will threaten to bring down them all, just like a fire in that apartment building. But LLC laws allow you to treat your restaurants like suburban homes on a cul de sac. They may all look the same, and be constructed the same, but they all stand on their own. And, while a fire in one will not be welcome to the neighbors, they’ll all still have some place to sleep that night.

Getting good advice and doing things right the first time will help you sleep at night too.  Before you open your second location, consult with an experienced restaurant lawyer to make sure you do all you can to protect the first.