One of the advantages of a Management Agreement related to the retail sale, service, and delivery of alcoholic beverages is that the purchaser of the assets of a bar, nightclub, restaurant, or other company that is licensed or permitted by the TABC may operate under the seller’s TABC license or permit while the purchaser’s TABC application is pending. This is known as an Interim Management Agreement. Under an Interim Management Agreement, the asset purchaser may purchase, sell, service, and deliver alcoholic beverages under the authority of the seller’s TABC license or permit on a temporary basis and in exchange retain a portion of the gross profits as a management fee. During the term of the Interim Management Agreement, the seller must retain ultimate control over the sale, service, and delivery of alcoholic beverages at the business while the purchaser manages the day-to-day operations as they relate to the TABC license or permit. When the purchaser’s TABC license or permit is ready to be issued, the seller’s permit is turned in for cancellation and the new permit is simultaneously issued to the purchaser.
Another situation where retailers utilize a Management Agreement is when the owner or lessee of a location holds a TABC license or permit and desires to contract with a management company to manage the day-to-day operations at the location in exchange for either a percentage of the gross profit or for a set management fee. These types of agreements are flexible and can be tailored to suit the needs of the license or permit holder and the management company.
A Concession Agreement allows the holder of a TABC license or permit to operate at a location belonging to a third-party, such as a hotel, stadium, public entertainment facility, or event center and may be used in tandem with a Management Agreement, depending on whether the concessionaire’s employees will be engaged in the sale, service, and delivery of alcoholic beverages at the location as opposed to the employees of the third-party that owns or leases the premises.
Ranger Licensing routinely assists clients in drafting Management and Concession Agreements to suit their individual needs. If your business needs such an agreement or if you would like to learn more, please contact us to discuss the details of your particular situation.