Tennessee ABC Turns Focus on Landlords

Tennessee ABC Turns Focus on Landlords

We learned about another new Tennessee Alcoholic Beverage Commission rule that may lead landlords to change deal terms in leases to restaurants, bars, liquor stores and distilleries in Tennessee. The TABC is requiring personal questionnaires on officers of landlord companies that take percent rent of 5% or more from a liquor licensee.

Previously, the TABC required a relatively unobtrusive questionnaire from the leasing company. Providing an EIN, date of formation and other basic information from the leasing company is not controversial.

Providing personal information from officers of the leasing company is not going to be received as well.

Rockwell's 1984 hit with Michael Jackson naively captures the fear of identity theft:

Who's watching me?
I don't know anymore . . . are the neighbors watching
Who's watching?
Well, it's the mailman watching me: and I don't feel safe anymore.
Tell me who's watching.
Oh, what a mess. I wonder who's watching me now,
(WHO?) the I.R.S.?

A handful of corporate officers of large companies that hold liquor licenses have had their identities stolen. This is a huge issue among licensing professionals.

Although corporate officers of companies that hold liquor licenses expect to provide personal information in connection with liquor licenses, landlords do not. We expect opposition to the new Tennessee ABC rule that will lead to problems with licenses for new stores.

We have one client that has already had to try to modify two leases - on the eve of their grand openings.  As if there is not enough stress trying to finalize open issues to obtain liquor licenses.

Going forward, to avoid disclosure, we encourage landlords to exclude liquor sales from percent rent or reduce percent rent to less than 5%.

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