Closing a Restaurant in Michigan: What Reddit Gets Right (and Wrong)
Michigan restaurant owners on Reddit are asking the right questions. Threads in r/restaurant, r/restaurantowners, and r/Detroit get posts about Michigan Liquor Control Commission obligations, lease exits, employee obligations, and sales tax. The answers vary widely. Here is what Michigan law actually says.
The Most Common Michigan Restaurant Closing Questions on Reddit
Michigan restaurant owners searching Reddit for closing guidance typically ask about Michigan Liquor Control Commission (MLCC) license surrender, the state's 72-hour final paycheck deadline, and how Detroit and Grand Rapids commercial lease courts handle defaults. The answers they find are often incomplete or based on other states' rules. Michigan has its own specific requirements that differ from national advice.
Michigan Liquor License: The MLCC Process
Michigan liquor licenses are administered by the Michigan Liquor Control Commission (MLCC). Michigan has a quota system for on-premises licenses in certain jurisdictions, which means some licenses have secondary market value. A Class C liquor license in Detroit or Grand Rapids can have significant transfer value depending on the local quota. Before surrendering your Michigan liquor license, consult with an MLCC-licensed liquor license broker to determine if your license can be sold. To surrender a license you cannot sell, you notify the MLCC in writing, return the physical license, and file a final liquor tax return. Michigan also requires you to pay any outstanding liquor tax liability before the MLCC will process the surrender.
Michigan Final Paycheck Law
Michigan requires that employees receive their final paycheck within the next regular payday following termination. However, if an employee is laid off, the employer must pay within the next regular payday or within 72 hours -- whichever is sooner. Michigan does not require employers to pay out accrued vacation or PTO upon termination unless the employer's written policy promises it. The Michigan Department of Labor and Economic Opportunity enforces wage payment laws. Violations can result in penalties of up to $1,000 per violation plus attorney fees.
Michigan Sales Tax and Business Dissolution
Michigan has a 6 percent state sales tax. When closing, you must file a final Michigan sales tax return with the Michigan Department of Treasury and cancel your sales tax license. Michigan also has a Corporate Income Tax (CIT) and a flow-through entity tax for pass-through entities. You must file a final Michigan business tax return for the year of closure. For LLC dissolution, you file a Certificate of Dissolution with the Michigan Department of Licensing and Regulatory Affairs (LARA). The filing fee is $10.
Michigan Commercial Lease Law
Michigan commercial leases require landlords to mitigate damages. A Michigan landlord must make reasonable efforts to re-let the space rather than letting it sit empty and collecting rent from you. Detroit's commercial real estate market has seen significant redevelopment since 2015, with strong demand in Midtown, Corktown, and downtown. Grand Rapids has a growing restaurant scene with active re-tenanting in the downtown core. If you personally guaranteed your Michigan lease, the landlord can pursue you individually even with the duty-to-mitigate obligation.
Michigan WARN Act
Michigan does not have a state WARN Act. The federal WARN Act applies to employers with 100 or more full-time employees. Most independent Michigan restaurants fall well below this threshold. However, if you operate a large restaurant group in Detroit, Grand Rapids, or Lansing with 100 or more employees, you must provide 60 days written notice of a mass layoff or facility closing under the federal WARN Act.