R81-5-1. Licensing

  (1) Bar establishment licenses are issued to persons as defined in Section 32B-1-102(74). Any contemplated action or transaction that may alter the organizational structure or ownership interest of the person to whom the license is issued must be submitted to the department for approval prior to consummation of any such action to ensure there is no violation of Sections 32B-5-310.

  (2) (a) At the time the commission grants a bar establishment license the commission must designate whether the bar establishment qualifies to operate as an equity, fraternal, bar based on criteria in 32B-6-404.

  (b) After any bar establishment license is granted, a bar establishment may request that the commission approve a change in the bar establishment's classification in writing supported by evidence to establish that the bar establishment qualifies to operate under the new class designation based on the criteria in 32B-6-404.

  (c) The department shall conduct an investigation for the purpose of gathering information and making a recommendation to the commission as to whether or not the request should be granted. The information shall be forwarded to the commission to aid in its determination.

  (d) If the commission determines that the bar establishment has provided credible evidence to establish that it meets the statutory criteria to operate under the new class designation, the commission shall approve the request.

  (3)(a) A converted full service restaurant licensee must operate as described in 32B-6-404.1, and must maintain at least the tiered percentages outlined in32B-6-404.1(4) of its total business from the sale of food, not including mix for alcoholic beverages, and service charges.

  (b) A converted full service restaurant licensee shall maintain records separately showing quarterly expenditures and sales for beer, heavy beer, liquor, wine, set-ups and food. These shall be available for inspection and audit by representatives of the department, and maintained for a period of three years.

  (c) If any inspection or audit discloses that the sales of food are less than the required percentage for any quarterly period, the department shall immediately put the licensee on a probationary status and closely monitor the licensee's food sales during the next quarterly period to determine that the licensee is able to prove to the satisfaction of the department that the sales of food meet or exceed the required percentage. Failure of the licensee to provide satisfactory proof of the required food percentage within the probationary period shall result in issuance of an order to show cause by the department to determine why the license should not be revoked by the commission.

  (4) bar establishment licensees with a Fraternal classification as of July 1, 2013 may allow guests that are over 21 without a host as long as long as the practice is allowed in the bylaws of the Fraternal and the Fraternal maintains at least 60% of its total business from the sale of food pursuant to Section 32B-6-407(10)(c)(i-iii).

  (a) The Fraternal shall notify the department of the intent to allow guests without a host by providing a copy of the bylaws.

  (b) The Fraternal shall maintain records separately showing quarterly expenditures and sales for beer, heavy beer, liquor, wine, set-ups, and food. These shall be available for inspection and audit by representatives of the department, and maintained for a period of three years.

  (c) If any inspection or audit discloses that the sales of food are less than 60% for any quarterly period, the department shall immediately put the licensee on a probationary status and closely monitor the licensee's food sales during the next quarterly period to determine that the licensee is able to prove to the satisfaction of the department that the sales of food meet or exceed 60%. Failure of the licensee to provide satisfactory proof of the required food percentage within the probationary period shall result in issuance of an order to show cause by the department to determine if the Fraternal may continue to allow guests without a host.