Closing a Restaurant in Arizona: What Reddit Gets Right (and Wrong)

Arizona restaurant owners on Reddit are asking the right questions. Threads in r/restaurant, r/restaurantowners, and r/phoenix get posts about Arizona Department of Liquor Licenses and Control obligations, lease exits, employee obligations, and sales tax. The answers vary widely. Here is what Arizona law actually says.

Arizona Liquor License: The DLLC Process

Arizona liquor licenses are administered by the Arizona Department of Liquor Licenses and Control (DLLC). Arizona has a quota system for certain license types, which means some licenses have significant secondary market value. A Series 12 Restaurant license in Maricopa County (Phoenix metro) can sell for $50,000 to $150,000 or more depending on location and market conditions. Before surrendering your Arizona liquor license, consult with an Arizona liquor license broker to determine if your license has transfer value. To surrender a license you cannot sell, you notify the DLLC in writing and return the physical license.

Arizona Final Paycheck Law

Arizona requires that employees receive their final paycheck within three business days of termination, or on the next regular payday -- whichever is sooner. This is one of the stricter final paycheck deadlines in the country. Arizona does not require employers to pay out accrued vacation or PTO upon termination unless the employer's written policy promises it. The Arizona Industrial Commission enforces wage payment laws. Violations can result in penalties plus attorney fees under the Arizona Wage Payment Act.

Arizona Sales Tax and LLC Dissolution

Arizona has a Transaction Privilege Tax (TPT) rather than a traditional sales tax. When closing, you must file a final TPT return with the Arizona Department of Revenue and cancel your TPT license. Arizona's combined state and local TPT rates range from 5.6 percent to 11.2 percent depending on the city. Phoenix's combined rate is 8.6 percent. For LLC dissolution, you file Articles of Termination with the Arizona Corporation Commission. The filing fee is $35 online. Arizona also requires a final Arizona income tax return for the business entity.

Arizona Commercial Lease Law

Arizona commercial leases require landlords to mitigate damages. A Arizona landlord must make reasonable efforts to find a new tenant rather than letting the space sit empty. Phoenix's commercial real estate market is highly active, particularly in Scottsdale, Tempe, and the downtown Phoenix corridor, where re-tenanting is faster. Tucson's market is smaller but has seen growth in the Fourth Avenue and University District areas. If you personally guaranteed your Arizona lease, the landlord can still pursue you individually even with the duty-to-mitigate rule.

Arizona WARN Act

Arizona does not have a state WARN Act. The federal WARN Act applies to employers with 100 or more full-time employees. Most independent Arizona restaurants fall well below this threshold. However, if you operate a large restaurant group in Phoenix, Scottsdale, or Tucson with 100 or more employees, you must provide 60 days written notice of a mass layoff or facility closing under the federal WARN Act.