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If you have decided to buy or start a restaurant, you might be feeling overwhelmed with all the legal matters to arrange. Having an understanding of issues that might arise in advance will help you to avoid them. In addition, having a basic understanding of all relevant issues will ensure you have peace of mind and can solely focus on establishing and operating your business. This article will take you through five common legal issues for restaurant owners and how to avoid them.

1. Health and Safety

As a restaurant owner, you will need to ensure that your business satisfies food and safety regulations. You will need to implement these regulations in your restaurant through readily available policies in line with the Australian New Zealand Food Standards Code (FSANZ). 

In the Australian Capital Territory, New South Wales, South Australia, Queensland and Victoria, it is also a legal requirement to have a food safety supervisor present at all times. This food safety supervisor is an allocated person who has completed specific qualifications to operate a restaurant in compliance with food safety regulations.

Not only does the business owner need to be well versed in these issues, but all relevant staff should also have adequate training on food handling and safety. Indeed, this protects customers and the staff themselves. In addition, you can avoid legal issues by ensuring all parties that help you operate your restaurant understand health and safety regulations.

2. Permits and Licencing

You must have the relevant permits and licences required to operate your business lawfully. Firstly, you will need to ensure you have the correct business licence from your local council. This licence will differ depending on the state your business is located, so you will need to check what applies to you. Furthermore, other permits and licences that will be required will depend on the specifics of your restaurant. 

For example, if you wish to have an outdoor seating area, you must obtain a licence. Similarly, you will also need a licence to serve alcohol or food out of a food truck or food stall. 

By understanding the permits and licences needed to operate your restaurant, you can take the necessary steps to prevent any disputes that might arise from this.

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3. Employment Law

Before operating a restaurant, you should ensure you are aware of the employment laws relevant to you. For example, you must pay restaurant employees in line with an award. Depending on the type of restaurant, this might be the Fast Food Award or the Restaurant Award. These awards also provide for standard hours of work and break entitlements, as well as leave entitlements. Restaurant owners should also be aware that pay records must be kept, with failure to do so resulting in a fine.

Having adequate employment policies that align with legal requirements will help mitigate any disputes relating to employment law.

4. Insurance

The nature of restaurants and their high-risk environment means that insurance will be critical to the safe operation of the business. Having adequate insurance can help prevent legal issues in the future and the huge losses that might arise. Some key areas insurance might cover include:

Public liability

This will protect your restaurant in the instance that a customer injures themselves or causes property damage.

Building and contents insurance

This type of insurance will protect any damage to the building itself or any business equipment, records or furniture.

Business interruption insurance

Business interruption insurance can help cover your business in the instance of unexpected closure, such as in the case of a fire or other property damage.

Management liability

Management liability insurance will protect the restaurant owners if there is a dispute about something that arises in the management of the business.

Understanding all the insurance options available to you and your restaurant can ensure you are adequately protected.

5. Commercial Leasing

Another common legal issue that restaurant owners might face is issues relating to commercial leasing. Understanding commercial leases and your rights as a tenant can help avoid these issues. Before you sign a commercial lease for a restaurant, you should consider: 

  • whether you will be able to modify the space to suit your restaurant needs;
  • who will be responsible for any maintenance required;
  • who will be responsible for outgoings and other similar costs; and 
  • in what instance you can terminate the lease if necessary. 

By having a thorough understanding of the terms of your commercial lease, you will be in a better position to negotiate and ensure its terms are beneficial for you as the tenant. One of the best ways to ensure you understand the terms of your lease agreement is to seek professional advice.

Key Takeaways

Before you decide to operate a restaurant, you should consider the common legal issues restaurant owners face. Common legal issues for restaurant owners include disputes relating to:

  • health and safety;
  • permits and licencing;
  • employment law;
  • insurance; and
  • commercial leasing.

If you need assistance navigating the potential legal issues restaurant owners face, LegalVision’s experienced business lawyers can help. You can contact them on 1300 544 755 or by filling out the form on this page.

Frequently Asked Questions

What are common legal issues faced by restaurant owners?

Some common legal issues restaurant owners face include disputes relating to health and safety, permits and licencing and employment law. Further, a restaurant owner may also have legal issues relating to insurance and commercial leasing.

How can I avoid legal issues as a restaurant owner?

Understanding potential issues that might arise when operating a restaurant in advance will help you avoid disputes. Having a basic understanding of all relevant issues will ensure you can focus on operating your business. Seeking legal advice is one way to give you peace of mind.


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