Leasing to a Beer-and-Wine Convenience Store: What Ontario’s Licence Asks of the Premises
The licence belongs to your tenant, but it is pinned to your address and can only follow the store to whoever buys it. That changes how a landlord should read the area, use, assignment and default clauses.
When a convenience store tenant sells beer and wine, does the licence belong to the tenant or to the premises?
To the operator, but it cannot change address and can only be transferred to the purchaser of that store. Under O. Reg. 746/21, a convenience store licence may be transferred to a different person only if the transfer is to the purchaser of the convenience store to which it applies (s.155(6)), and convenience store licences are not on the list of licences that can be moved to a different location (s.156(1)). The premises carry the rest of the eligibility test: the store must have no more than 4,000 square feet of retail floor space, food products for retail sale must occupy at least half of that space, and it must offer at least five of ten listed food types. So when a tenant asks you to consent to an assignment, the Registrar’s transfer and your own lease paperwork have to move together.
Source: Ontario, O. Reg. 746/21 (Licensing) under the Liquor Licence and Control Act, 2019, s.1, s.155, s.156 (consolidation from October 29, 2026)
I’m Arthur Zhao with AZ Real Estate Partners. Picture the call from your convenience store tenant: they have found a buyer for the business, the buyer wants to keep the store exactly as it is, and they need your consent to assign the lease. Then, almost as an aside: the beer and wine licence has to go to the buyer too.
That aside is the part worth slowing down for. In Ontario, a store sells beer and wine under a convenience store licence, one of the classes of a licence to operate a retail store issued by the Registrar of the Alcohol and Gaming Commission of Ontario (AGCO). The licence is the operator’s, not yours. But the regulation attaches it so tightly to the store and its address that it ends up running through almost every clause of a retail lease.
Below I go through a commercial lease clause by clause, from the description of the premises to default and re-entry, and for each one set out what the regulation fixes and what is left for your lease to handle. This is a reading of the statute and regulation, not legal advice on a specific lease; for a live deal, bring in your real estate lawyer.
The premises clause: which side of 4,000 square feet
According to O. Reg. 746/21 s.1, a convenience store is a store that (a) has no more than 4,000 square feet of retail floor space; (b) in which food products offered for retail sale, excluding prepared food that may be eaten on site, occupy at least half of the retail floor space; (c) offers a variety of at least five of these ten food types for in-person sale: canned food, dry food, frozen food, fresh fruits, fresh vegetables, meat or meat alternatives, dairy or dairy alternatives, non-alcoholic beverages, baked goods and snack foods; and (d) is not primarily identified to the public as a pharmacy.
Cross the 4,000-square-foot line and the store no longer fits that definition. Above it, the regulation’s other class is the grocery store: more than 4,000 square feet of retail floor space, food products occupying at least 10,000 square feet or at least half of the retail floor space, a variety of each of the same ten food types, and the same pharmacy exclusion. That is a different licence class with a higher bar on food range.
Two things for the landlord. First, the number that matters is retail floor space, not the rentable area on your lease schedule. Section 1 of the regulation defines it as any indoor space that is fully enclosed by walls in which products or services are offered for sale to the public. That points away from a pure stockroom or office, but how it applies to a particular floor plan (a walk-in cooler customers enter, a mezzanine, a counter area) is for AGCO to say, not for you or me; have the tenant confirm with AGCO how its space will be measured. Second, the Act makes the premises part of eligibility: under the Liquor Licence and Control Act, 2019 s.3(4)(f), an applicant is not eligible if the premises do not comply with the Act, the regulations or the Registrar’s standards, or if, in the Registrar’s opinion, the applicant does not exercise sufficient control, directly or indirectly, over the premises. Your lease is what gives the tenant that control.
Permitted use and exclusives
Section 72(1) of O. Reg. 746/21 authorizes a convenience store licensee to keep for sale, offer for sale or sell beer, wine and ready-to-drink beverages in a convenience store operated by the licensee, and to deliver liquor for a fee from that store. Spirits are not on that list.
If your permitted use clause reads “convenience store” and nothing more, it may or may not be read to cover alcohol sales. The cleaner approach is to name the activity: the sale of beer, wine and ready-to-drink beverages under an Ontario convenience store licence, incidental to the convenience store use. Naming it also gives you a hook for a covenant that the tenant keep the licence in good standing and keep the store within the regulatory definition, which s.85(1) already requires of the licensee.
Then look sideways at the rest of the property. If another tenant in the plaza holds an exclusive covering convenience-store use or the sale of beer and wine, granting this permitted use could put you in breach of that other lease. Pull every exclusive and restrictive covenant on the site before you sign off.
⚠️Beer and wine do not count as food. O. Reg. 746/21 s.85(2) says that, when testing whether the store still meets the definition, liquor sold in the store is not considered a food product. If coolers and shelving for alcohol keep spreading, the food share of retail floor space can slip below half, and the store stops meeting the definition its licence depends on (s.85(1)). A renovation or re-merchandising plan that adds alcohol shelving is worth a second look for this reason.
Assignment and change of control: where the licence and the lease meet
This is the clause the opening phone call is really about. The regulation sets three rules that land on it.
The licence can only follow the store to its buyer. O. Reg. 746/21 s.155(6) says the Registrar shall not transfer a convenience store licence to a different person unless the transfer is to the purchaser of the convenience store to which the licence applies. And s.156(1) now lists only the offsite winery retail store licence as transferable to a different location. A convenience store licence is not on that list, so the regulation leaves no route for moving it to another address.
The buyer has to qualify, premises included. Under s.155(3)(b), the Registrar shall not transfer a licence if the recipient would not be eligible under s.3(4) of the Act, and s.3(4)(f) is the premises-and-control test from the premises clause above. A buyer who has a deal for the business but no assignment of the lease is asking the Registrar to accept that it controls premises it has no right to occupy.
Changes inside the tenant can trigger a transfer too. According to s.154(1), a licensee may not carry on under the licence after any of these changes until the Registrar transfers the licence: an individual becomes or ceases to be an officer or director of the corporate licensee (or of a corporation that effectively controls the licensed activities); a partner joins or leaves a partnership licensee; someone acquires a beneficial interest that results in holding or controlling 10% or more of the outstanding shares, or of a class of shares; or a person other than the licensee becomes entitled to any of the profits from the sale of liquor or liable for obligations from the licensed activities. Under s.154(3), a director or officer who simply leaves, or a partner who leaves, needs only notice to the Registrar within 30 days. Compare that list with the change-of-control definition in your lease: a share sale your lease treats as no assignment at all may still require a licence transfer.
Two details help with timing. Section 157 lets the seller contract out the operation of the business to a buyer who has filed a transfer application, if the seller has signed an authorization filed with the Registrar and no proposal to suspend, revoke or refuse to renew the licence has been issued; the seller stays liable under the licence during that period. And under s.158, a transferred licence carries the same conditions it had before the transfer.
💡 My own view: the assignment clause is the place where your consent and the Registrar’s transfer approval have to line up. Because the licence can only follow the store to its purchaser, a consent process that ignores the licence transfer can strand both parties. If you consent and the transfer is refused, you may have an assignee running the store with no licence for the beer and wine sales it paid for. If your consent waits for the licence, the transfer can stall on the premises-control question in s.3(4)(f), because the buyer has no right to occupy the store yet. I would write the consent so that it is conditional on, or at least coordinated with, the transfer application, and ask for the paperwork on both tracks at the same time.
Rent structure: one flag on percentage rent
Many retail leases carry percentage rent, a share of the tenant’s gross sales above a breakpoint. Item 4 of s.154(1) lists, as a change requiring a licence transfer, a person other than the licensee becoming entitled to any of the profits from the sale of liquor.
The wording is profits from the sale of liquor, not gross sales. Whether percentage rent calculated on gross sales that include beer and wine falls inside item 4 is not something the regulation says either way, and I am not saying percentage rent is unlawful. It is a question to settle before signing: have the tenant raise it with AGCO or with its lawyer. If the answer is unclear, one option the parties can discuss is defining gross sales to leave liquor sales out of the percentage calculation.
Hours and operating covenants
Retail leases, especially in plazas and malls, often require the tenant to stay open during set hours. The licence has its own clock: under O. Reg. 746/21 s.82, liquor may only be available to customers between 7 a.m. and 11 p.m. on any day. A store open around the clock is fine as a store; the beer and wine simply cannot be available outside that window. Your operating covenant and the liquor hours are two separate obligations, and the lease does not need to repeat the regulation to coexist with it.
Where the store does its selling also has a rule. Section 88(1) requires that all aspects of the in-person sale of liquor take place within the retail floor space of the store. For orders placed other than in person and picked up at the store, s.88(3) requires pickup at or immediately outside the store, by a person at least 19 years old, between 7 a.m. and 11 p.m. If your lease controls use of common areas, sidewalks or patios, keep that in mind before approving any pickup arrangement outside the unit.
One more operating point: s.85(1) requires the licensee to ensure the store continues to be a convenience store within the regulation’s meaning. A continuous-operation covenant in your lease and that condition push the same way, but only the licence condition decides whether the beer and wine can stay on the shelves.
Default and re-entry: what you cannot step into
Landlords sometimes assume that if a licensed tenant defaults, they can take back the premises and keep the business going for a while. The regulation does have a temporary arrangement: s.155(9) allows the Registrar to transfer a licence for up to one year to permit the orderly disposition of the business when, among others, a mortgagee, franchisor or landlord takes possession of the licensed premises. But that subsection names only two kinds of licence: a liquor sales licence and a licence to operate a ferment on premises facility. A convenience store licence is not among them.
So plan your remedies without the beer and wine. After re-entry, the regulation gives you no transfer route of your own, and because the licence can only be transferred to a purchaser of the store, a new operator who simply takes over the space should expect to deal with AGCO on its own licence; confirm that route with AGCO when the time comes. When you underwrite the tenant’s covenant, value the store as a store, and treat the licence as something that may not survive a default.
Clause by clause: what the regulation fixes, what your lease must handle
ℹ️Some areas still carry an old prohibition. Under the Liquor Licence and Control Act, 2019 s.82(1.1), a prohibition on establishing a government store in a municipality or part of one under the former Liquor Licence Act continues as a prohibition on operating a retail store there until it is lifted. The regulation’s local-option rules (O. Reg. 746/21 s.159) add exceptions. Which areas are affected is not covered here; have the tenant confirm the address with AGCO.
Before you sign, consent or renew
Sorted by who has to supply each item.
- ☐Show you the licence, or the status of its application, and confirm it is a convenience store licence
- ☐Provide its figure for retail floor space and how AGCO measures it
- ☐List the current officers, directors and shareholders holding 10% or more, and tell you when that changes
- ☐On a sale of the business, provide confirmation that the buyer has filed its licence transfer application
- ☐Name the use: sale of beer, wine and ready-to-drink beverages under an Ontario convenience store licence
- ☐Require the tenant to keep the licence in good standing and the store within the regulatory definition
- ☐Tie assignment consent to the Registrar’s transfer application, with an outcome if the transfer is refused
- ☐Align the change-of-control definition with the changes listed in s.154(1)
- ☐Settle how gross sales is defined if any rent is a percentage of sales
- ☐Ask AGCO how retail floor space is measured for this unit
- ☐Check with AGCO whether the address falls in an area with a carried-over prohibition on retail stores
- ☐Ask AGCO, or the tenant’s lawyer, whether percentage rent that includes liquor sales triggers s.154(1)
- ☐Confirm zoning and any municipal business licensing with the municipality
Buying a Restaurant or Bar With a Liquor Licence: Why the AGCO Transfer Can’t Close on the Same Day as Your Deal →Leasing a Plaza Unit to a Vape Shop in Ontario: What a Specialty Vape Store Must Meet and What Your Lease Should Cover →The Retail Business Holidays Act and Your Retail Tenants: Which Municipality Decides Whether They Can Open →First-Time Renter Guide →
Frequently Asked Questions
Do I need a liquor licence of my own as the landlord?
The convenience store licence authorizes the licensee to sell in a store it operates (O. Reg. 746/21 s.72(1)), so the licence is the operator’s, not yours. Your premises still come into it: under the Liquor Licence and Control Act, 2019 s.3(4)(f), the Registrar looks at whether the applicant has sufficient control over the premises, and s.4(2)(c) allows inquiries into the owner of the premises. Expect your lease to be part of that picture.
What if my tenant takes the unit next door and the store goes over 4,000 square feet?
A convenience store must have no more than 4,000 square feet of retail floor space (O. Reg. 746/21 s.1), and s.85(1) requires the licensee to keep the store within that definition. Above that size, the regulation’s other class is a grocery store, which must offer every one of the ten listed food types. Retail floor space counts indoor, wall-enclosed space where products or services are offered for sale to the public, so not every added square foot necessarily counts. Before approving an expansion, have the tenant confirm with AGCO how the combined space will be measured and what it means for the licence.
Do changes in my tenant company’s shareholders or directors matter to me?
They can. Under O. Reg. 746/21 s.154(1), a new or departing officer or director, or someone reaching 10% or more of the shares, means the licensee may not carry on under the licence until the Registrar transfers it; a departing director or officer needs only notice within 30 days (s.154(3)). A share deal your lease treats as no assignment can still leave the store unable to sell beer and wine until AGCO acts.
Can a store with a pharmacy counter inside qualify?
The definition in O. Reg. 746/21 s.1 excludes a store that is primarily identified to the public as a pharmacy, even if a pharmacy is located within it. So a pharmacy inside the store does not by itself rule it out; how the store presents itself to the public is the test. If the tenant’s branding leans toward the pharmacy, have it confirm with AGCO.
Can my tenant sell beer from the storeroom or hand it over on the sidewalk outside?
Under O. Reg. 746/21 s.88(1), every aspect of an in-person sale must happen within the store’s retail floor space. For orders placed other than in person, s.88(3) allows pickup at or immediately outside the store, by someone at least 19, between 7 a.m. and 11 p.m. Retail floor space is defined in s.1 as indoor space fully enclosed by walls where products or services are offered for sale to the public, so a sidewalk is outside it. How that applies to a storeroom or other back-of-house area in a particular unit is a question to put to AGCO.
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