Whether you’re a seasoned restaurateur or opening your first food truck, there are many legal considerations you should take care to address. From food safety to intellectual property, restaurant law can be extremely complex. A top-notch restaurant lawyer can help you navigate all the necessary regulations, so you can get back to focusing on utensils and umami.
What do I need to open a restaurant?
The legal nuts and bolts of opening and operating a restaurant can be very complicated. Here’s an overview of some of the many topics you’ll need to address:
Formation
Before you even open a restaurant, you must decide what form of business organization you will use--for example, a corporation, a partnership or an LLC. An attorney can help you decide which form is most advantageous for your business, complete any necessary state and local registrations and draft an Operating Agreement or Bylaws.
If your restaurant is a franchise, you’ll also need a skilled franchise attorney at this early stage to review and negotiate the agreement and make sure you understand your rights and obligations.
Fundraising
Fundraising can be particularly challenging for a new restaurant. Investors anticipate that restaurants have a high rate of default and also face high upfront costs for inventory and equipment, both of which rapidly lose value. A lawyer can assist you in structuring your initial investment agreements to both appear more attractive to investors and protect your personal assets. If you do encounter any funding difficulties, an attorney can also assist with any sale or leaseback transactions, as well as restructuring troubled operations for owners, lenders or franchisors. Working with an attorney is critical to avoid disputes with investors or costly litigation.
Real Estate
You will need to check local zoning ordinances before you choose a restaurant location. Once you’ve found your dream space, you will need to consider purchasing the property or negotiating a commercial restaurant lease agreement. Restaurant leases often contain specific provisions regarding venting and kitchen needs, which an attorney can help you tailor to your specific needs.
Licenses
Restaurants require business licenses, food safety licenses and, if you plan on serving alcoholic beverages, liquor licenses. Further licensing requirements may also apply in specific jurisdictions. An attorney can identify and apply for all necessary licenses, so you can legally serve the hungry hordes.
Liquor licenses are difficult to obtain in every state and can be expensive. Moreover, it is easy to lose a liquor license--you could face suspension or revocation of your license, for example, if one of your employees negligently sells alcohol to a minor. Your lawyer will help you complete your liquor license application and advise you on developing appropriate policies to maintain it.
Labor & Employment Laws
Employment is strictly regulated. You will need to comply with federal and local laws and regulations governing minimum wage, tipping, overtime, tax withholding and numerous other matters. Even the questions you may ask in a job interview are restricted by law. Taxes and insurance will also be a continuing major legal concern for your business.
Agreements
Three types of agreements are particularly common in the restaurant business--franchise agreements, commercial restaurant lease agreements and employment contracts (particularly for management employees). All of these must be carefully negotiated and drafted to suit your business’s needs and protect your restaurant. A skilled business attorney can assist you in creating any agreements you need along the way, helping you avoid disputes, breaches or costly litigation.
Intellectual Property
Trademark protection is a large part of operating a successful restaurant. Trademarks can apply not only to the name of your restaurant, but also to specialty dishes (“Big Mac,” for example). A top restaurant lawyer can help you protect your trademarks nationwide and even abroad, if necessary.
In addition to trademarks, your business may possess trade secrets, such as recipes and business methods--you would not want an ex-employee, for example, opening a competing restaurant that serves your signature dish under a different name. An attorney can help you protect your trade secrets, as well as draft non-disclosure or non-compete agreements for your employees.
Finally, it is possible that a food recipe could be patentable. A list of ingredients and instructions for preparing food can be considered a composition of matter and a process, so they could be eligible for a patent under U.S.C. Title 35. However, the recipe must also be novel and nonobvious, which would mean that the combination of ingredients used or the way they are processed results in a food that is completely unexpected. That is to say, the final outcome could not be anticipated by someone with knowledge of cooking, unlike say adding an unlikely spice to a particular dish, leading to an expected change in flavor. Therefore, most patentable recipes are actually the results of laboratory work.
Food and Liquor
As a restaurant owner, you will be subject to both federal and state regulations. You should expect regular surprise food safety inspections and your restaurant might be closed following a negative inspection. Areas that are extensively regulated by state and federal authorities include:
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Employee hygiene;
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Employee safety;
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Food preparation methods;
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Food labeling;
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Food sourcing; and
- Maintenance of food storage and preparation equipment such as freezers, ovens, counters, etc.
How Priori Can Help
Priori is a curated network of high-quality lawyers who are experienced in a wide range of legal issues, including restaurant law. A Priori attorney can help you navigate the wide variety of legal concerns that may arise when running a restaurant, so you can rest assured that everything from lease to liquor license is in order.