Posted by: Dec 02, 2019

This article is Part 2 of a three-part series addressing a common, thorny issue in Florida alcoholic beverage licensing: Who can have a financial or controlling interest in a beverage company? Part 1 focuses on the Three Tier System and how it is enforced through the licensing process. Part 2 focuses on identifying the Interested Parties of a beverage license applicant. Part 3 focuses on the qualities of a Related Party that can disqualify the applicant from getting a Florida alcoholic beverage license.

Who are the Interested Parties?

To be granted an alcoholic beverage license in Florida, the license applicant and each of the Interested Parties of the applicant must have no interest or connection to a business operating in Florida or in any other state in a different tier of the Three Tier System.

The Florida Beverage Law and the ABT’s regulations describe the Interested Parties for purposes of alcoholic beverage licensing. All Interested Parties are required to be identified on the applicant’s license application sent to the ABT. A subgroup of Interested Parties–called Related Parties–must also submit fingerprints to the ABT and meet additional qualifications (covered in Part 3 of this series).

For each applicant for an alcoholic beverage license in Florida, the “Interested Parties” include each person or company that is:

  1. An officer of the applicant;
  2. A shareholder or member of the applicant;
  3. A director of the applicant; or
  4. An individual or company that has a direct or indirect interest in the applicant.

While the applicant’s officers, shareholders, members, and directors might be easy to identify, it can sometimes be more difficult to determine whether an individual or company is an Interested Party for this purpose. Florida Statutes Section 561.17 provides some actionable guidance.

According to the Florida Beverage Law, an Interested Party includes:

  1. A person or company that has a right to participate in control of the sale of alcoholic beverages;
  2. A person or company that has a security interest in the alcoholic beverage license; or
  3. A person or company that has a right to a percentage of the proceeds from the alcoholic beverage business (subject to the exceptions below).

An Interested Party does not include:

  1. A person that derives revenue from the alcoholic beverage license solely through a contractual relationship the substance of which is not related to the control of the sale of alcoholic beverages; or
  2. A shopping center with 5 or more stores, one or more of which has an alcoholic beverage license and is required under a lease common to all tenants to pay no more than 10% of the gross revenue of the business holding the license to the shopping center.

When Does an Interested Party have an “Interest or Connection” in a Beverage Industry Member?

Florida Statute Section 561.22 describes the ways in which an individual, corporation, or partnership might be “interested or connected” with respect to a beverage industry member. In addition, a 2012 regulatory opinion involving Burger King Corporation provided clarification about the application of the statute.

An individual is “interested or connected” with respect to a beverage industry member in each of the following situations:

  1. The individual directly owns more than 0.5% of the stock of a corporation or LLC that is engaged, directly or indirectly, in a licensed activity.
  2. The individual has a 0.5% interest in a blind or revocable trust that owns a corporation or LLC that is engaged, directly or indirectly, in a licensed activity.

A  corporation or LLC is “interested or connected” with respect to a beverage industry member in each of the following situations:

  1. The corporation or LLC is “affiliated” with another corporation or LLC that is engaged, directly or indirectly, in a licensed activity in Florida or any other state of the United States. For this purpose, “affiliated” means controlled by means other than direct stock ownership. For instance, if the Board of Directors of VendCo, Inc. includes John Smith, and John Smith is also an executive officer of ManuCo, Inc., then VendCo, Inc. and ManuCo, Inc. would be considered affiliates and they each are “interested or connected” with respect to the other company (this is essentially the situation that existed in the Burger King case).
  2.  The corporation or LLC is controlled by another corporation or LLC (the Parent Company) which owns or controls the majority stock or controlling interest in a third corporation or LLC (the Brother/Sister Company) that is engaged, directly or indirectly, in a licensed activity in Florida or any other state of the United States. For example, if the voting units of VendCo, LLC are owned by ParentCo, LLC, which also owns the voting units of ManuCo, LLC, then VendCo, LLC and ManuCo, LLC are “interested or connected” within respect to one another.
  3. The majority stock of such corporation or LLC is owned by another corporation (the Parent Company)–whether or not the Parent Company has control of the applicant–which owns or controls the majority stock or controlling interest in a third corporation or LLC (the Brother/Sister Company( that is engaged, directly or indirectly, in a licensed activity in Florida or any other state of the United States. For example, if a majority of all of the stock of VendCo, Inc. (considering both voting shares and non-voting shares) is owned by ParentCo, LLC, which also owns a majority of all of the voting and non-voting units of ManuCo, LLC, then VendCo, Inc. and ManuCo, LLC are “interested or connected” within respect to one another.

A partnership is considered to have an interest in or connection with respect to another beverage industry member if any partner of the partnership–whether an individual, corporation, or LLC–is “interested or connected” with respect to the beverage industry member.

Do you have questions about Interested Parties? Contact us at contact@brewerlong.com to schedule a consultation.

Because we’re attorneys: This blog post is provided on an “as is” and “as available” basis as of the date of publication. We disclaim any duty to update or correct any information contained in this blog post, including errors, even if we are notified about them. To the fullest extent permitted by law, we disclaim all representations or warranties of any kind, express or implied with respect to the information contained in this blog post, including, but not limited to, warranties of merchantability, fitness for a particular purpose, title, non-infringement, accuracy, completeness, and timeliness. We will not be liable for damages of any kind arising from or in connection with your use of or reliance on this blog post, including, but not limited to, direct, indirect, incidental, consequential, and punitive damages. You agree to use this blog post at your own risk. Regarding your particular circumstances, we recommend that you consult your own legal counsel–hopefully BrewerLong.