Convenience store operators cater to customers with many needs, including travelers filling up their gas tanks, hopeful lottery winners, and neighborhood residents with midnight munchies. Ensuring everyone gets what they came for is more complicated than stocking shelves with a bit of everything. Selling a variety of products, especially heavily regulated ones like alcohol and tobacco, makes business license management complex.
An exclusive survey of convenience stores from Avalara and Convenience Store News found many managers believe they have business license compliance in check, but they might be a tad overconfident.
Unexpected challenges of convenience store licensing
Even if you run a single convenience store, it can be tough to comply with licensing regulations. The multitude of products sold can include prepared foods like pizza and wieners, motor fuel and propane, cigarettes and vaping cartridges, beer, wine, liquor, and packaged goods. Each of these products may require obtaining licenses from federal, state, county, and local jurisdictions.
License challenges are compounded if you have multiple stores. Store managers can be responsible for obtaining eight to 10 or more licenses for each location, plus you must keep up with license and permit renewals.
Noncompliance consequences can include fines, reputational damage, and even store closures. Given the severe impacts that can come from mistakes, convenience store operators should give as much attention to regulatory compliance as they do to selling.
Survey insights: How convenience store managers view licensing compliance
More than 100 retailers replied to the survey by Avalara and Convenience Store News, ranging from small companies to those managing tens to hundreds of stores.
The majority of respondents (84%) said they aren’t concerned about lacking crucial business licenses and nearly as many (81%) aren’t worried about being overlicensed.
But with more and more regulated products being sold, differing methods of maintaining compliance, and a lack of standardized practices, they might be viewing their compliance through rose-colored glasses.
In fact, the survey found many respondents missed the mark on business license compliance, sometimes with costly outcomes.
Possible consequences of noncompliance for regulated products
The survey found 66% of convenience stores who participated say licensing authorities are becoming stricter. Audits are common and the risks of noncompliance for retailers that sell regulated products are apparent in their firsthand accounts.
Nearly half (48%) of convenience store businesses surveyed said they found out about noncompliance through authorities or failed inspections.
Respondents said enforcement actions resulted in fees of up to $1,000 per license, delayed grand openings, and, in one case, a three-day business suspension. While noncompliance didn’t always result in penalties, companies may be more likely to be scrutinized in the future.
About half (53%) of retailers that fell out of compliance cited additional fees as their greatest concern, while 37% worried about a business shutdown. Only 7% said they feared reputational damage, despite the potential ramifications to a company’s bottom line over the long term.
What licenses are needed for convenience stores?
Licensing requirements for convenience stores vary depending on what you sell and where you sell.
You’ll need federal, state, county, or local licenses for both your business and regulated products like tobacco, alcohol, lottery tickets, or prepared foods. Some of these licenses, including alcohol and tobacco, require background checks and fingerprinting.
Even items you may not think would be regulated, like fishing bait, may require another license.
Where your store is located matters because you’re always beholden to the whims of the jurisdiction making the rules. Two stores in the same ZIP code could be in different jurisdictions and need different licenses.
Keeping track of all these licenses can be difficult. Nearly all (90%) of managers surveyed said their licensing function is centralized. This response suggests these managers recognize the importance of centralized license management as a best practice.
Who is responsible for license management?
Tracking business licenses requires expertise, but only 6% of convenience stores surveyed have a dedicated compliance department. Results show 44% allocate license management to accounting, 32% to operations, and 12% to legal.
While most survey respondents have more than 10 stores, the majority of teams have fewer than five people managing licenses.
Workload expectations vary widely, with about two-thirds of those surveyed believing one individual can oversee 500 licenses yearly. Avalara believes that with the right solutions in place, an experienced professional can typically manage between 2,000 and 3,000 licenses depending on the types.
Future concerns in licensing compliance
Making sure companies meet their licensing requirements both now and going forward means focusing on having processes in place to deal with both anticipated and unexpected challenges.
Some of the concerns survey respondents are working to address include:
- Hiring and training business license staff: When seeking staff to maintain licensing compliance, 43% of retailers recruit from within. Most convenience stores (79%) say training is conducted by shadowing existing teams. Just 9% have an in-house preparation course.
- Challenges with license filings and insufficient automation: Respondents said that online systems offered by the jurisdictions haven’t made obtaining and renewing licensing easier. The survey found 61% of store executives cited different renewal methods as their greatest burden.
- Remaining compliant during sales and acquisitions: When it comes to growth, businesses are thinking ahead. The vast majority (87%) of convenience store executives noted licenses are a critical part of due diligence for mergers and acquisitions.
Solutions for efficient business license management
It’s possible for companies to overcome these challenges by partnering with business license experts who provide licensing management software and services. Automation streamlines compliance, helps reduce risk, and saves time. Avalara License Management helps convenience stores stay compliant with built-in workflows, the ability to easily research jurisdictional requirements, and automated applications and renewals for hundreds to thousands of licenses, permits, and tax registrations.
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