What to consider when acquiring a second premises

Over the last 24 or so months, we have seen several Clubs expand their operations by opening secondary sites. Often, this occurs when a larger Club purchases the land and business of another smaller Club. This article examines the considerations and processes involved for Clubs acquiring additional premises.

Benefit to Members

One of the first questions that Clubs usually consider when making important strategic decisions is: “How does this benefit our members?” The decision to acquire new premises is no different.

Of course, one of the primary considerations will be whether the new premises can be operated profitably so that the Club will have more income to reinvest into facilities and other programs for the benefit of members. However, other relevant factors may include:

• Could the location of the new premises be more convenient for some existing members?
• Are there additional facilities at the new premises that might benefit some members, such as function rooms, pools, or other sporting facilities?
• Would the new premises open the door to expanding the Club’s membership base?
• Could a new premises increase the Club’s buying power, allowing you to negotiate better deals with suppliers?

Member Consultation

If you’ve identified suitable premises, the next step is to determine whether it may be necessary or appropriate to obtain the approval of your members before acquiring the new site.

Some Club Constitutions have “reserve powers” which specifically require the Board or Management Committee to refer certain decisions to a general meeting of members. Therefore, you should check whether your Constitution requires your members to vote on acquiring new premises, spending over a certain amount of money, and other similar decisions.

Even if your Constitution does not specifically require this, it will almost certainly be a good idea to engage in some kind of consultation with your members before deciding to acquire a new premises, and you might decide to have your members vote on this decision anyway.

This not only allows members to have their say on an important strategic decision that will affect their Club but also gives your Board/ Management Committee authority to move ahead with the acquisition with confidence that members understand and support the decision.

Contract and OLGR Approval

Once your Club has committed to proceeding with the acquisition, a lease of the premises or a Contract for your purchase of the freehold will be prepared. If you intend to sell liquor and/ or operate gaming machines from the new premises, then you’ll need to obtain approval from the Office of Liquor and Gaming Regulation (OLGR) to obtain a transfer of the existing liquor licence for the new premises (assuming the premises is licensed), and/ or to operate gaming machines.

Depending on the specific combination of OLGR applications that you are making, you will probably need to provide:

• a copy of the minutes of a board meeting or general meeting where the Club resolved to acquire the new premises;
• confirmation of the hours and days the additional premises will be open for sale of liquor;
• a statutory declaration confirming that the Club has complied with its rules or by-laws in making the application;
• a copy of the Community Club liquor licence for your main premises;
• plans of the additional premises, including plans of the proposed gaming area.

Where an application is approved, OLGR will fix the number of gaming machines and gaming operation hours for the additional premises. The maximum number of gaming machines allowed at one premises for a club is 300.

In our experience with these matters, it can take between four to six months for an application for additional premises to be approved. This processing period may be delayed where the application has not addressed the various requirements under the Gaming Machine Act 1991 and the information required by the Commissioner to assess the application. To ensure there are no unnecessary delays in obtaining approval for additional gaming premises, it is important to engage a professional with experience in such applications.

If your Club is considering expanding its business and requires assistance with this process, please contact me.