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Location and lease — what to finish before you sign
The first question is how much key money (the Korean practice of paying a premium to the outgoing tenant) you pay. The lease agreement is a few pages long and is rewritten every two years.
The lease agreement, dozens of pages long, comes first, and once you sign you live with those terms for 5 or 10 years. The agreement the landlord hands you is a document written from the landlord's side.
Five questions to ask when you look at a location
- Are a noraebang and alcohol sales allowed at this address? Give the address to the city Planning (Zoning) department and ask. Many cities issue a zoning verification letter for a fee. Example: in the City of Los Angeles you can look up a parcel's zoning on ZIMAS at no charge.
- Are there permit conditions already attached to that address? Example: conditional use permits for alcohol in the City of Los Angeles carry conditions by address, such as hours of operation, no dancing and room layout. Get the existing determination and read it.
- How close are housing, schools and churches? Measure the distances in the table below yourself.
- Is there enough parking? Neighbor complaints often start with parking before noise.
- What is upstairs and next door? If it is housing, a clinic or a tutoring school, soundproofing costs and the risk of complaints go up. A second floor or basement changes the fire protection requirements (the Build-out & Equipment section).
| State | Rule |
|---|---|
| California | If the premises or its parking lot is within 100 feet of a residence, a new license is in principle not issued (ABC Rule 61.4; exceptions exist). Within 600 feet of a school or playground, or in the immediate vicinity of a church or hospital, the liquor authority may refuse (B&P §23789). This is discretionary, not an automatic bar, and it does not apply to a transfer of ownership of an existing license. |
| New York | An on-premises license that includes spirits is not issued within 200 feet of a school or place of worship on the same street. In cities with a population of 20,000 or more, it is restricted where there are three or more existing licensed premises within 500 feet (Alcoholic Beverage Control Law §64(7)). |
| Texas | A city or county may by ordinance prohibit sales within 300 feet of a school, church or public hospital (Alcoholic Beverage Code §109.33). If there is no ordinance, there is no distance requirement. |
| Georgia | Spirits are prohibited within 100 yards of a church and 200 yards of a school (O.C.G.A. §3-3-21). A city or county may set stricter rules. |
Clauses you must look at in the lease
Below is a list of items to negotiate. The wording needs to be refined by a commercial lease attorney.
| Item | What to check |
|---|---|
| Rent structure (NNN · CAM) | On top of base rent, you pay your share of property tax, building insurance and common area maintenance. Get quotes as "base rent + NNN", and ask for the reconciliation statements for the last 3 years and a cap on annual increases. |
| Use clause (Use clause) | Write out "private-room karaoke, alcohol sales, food, amplified music, late-night operation" in words. If it is written narrowly, you cannot change the type of business later. |
| Termination contingent on permits | The right to terminate without penalty if you do not obtain the liquor license, use permit and building permit within a set deadline. Without this clause, you pay monthly rent on an empty space. |
| Rent commencement date | Tie it to "a number of days after permits are obtained" or "the opening date", not a calendar date. Free rent during construction is also set here. |
| Personal guarantee | Ask for a cap on the amount, expiry after a set period, and release after assignment. |
| Construction allowance (TI allowance) | The amount and payment conditions, in writing. State item by item who pays for sprinklers, heating and cooling, electrical upgrades and accessibility improvements. This is set by negotiation, not by law. |
| Exclusivity clause | A promise not to let another noraebang into the same shopping center. Conversely, also check whether an existing tenant's exclusivity clause blocks your business. |
| Assignment · sublease | Wording that the landlord may not unreasonably withhold consent when you sell the business. |
| Term · renewal options | A term long enough to recover your investment in soundproofing and interior work, and the method for setting rent on renewal. |
| Signage · hours of operation | Whether both the building rules and the city allow the sign you want and late-night operation. |
In California, since 2017 commercial lease agreements have been required to state whether the premises have been inspected by a Certified Access Specialist (CASp). If there is an inspection report, get a copy.
Getting a feel for rent
Official rates at the level of a commercial district are mostly not public. Going by metro-wide averages and asking prices on individual listings, the retail average for the Los Angeles metro area was about $2.8–$3.1 per square foot per month (NNN not included) as of the second quarter of 2026, and asking prices on listings in Duluth (GA) and Carrollton (TX) were around $19–$34 per square foot per year (commercial real estate sites, viewed October 2026). For the same 4,000 square feet, monthly rent differs two to three times depending on the area, and break-even sales differ accordingly.
When you take over an existing venue
- California — A liquor license can be transferred, but it must go through escrow, and it is complete only when the liquor authority approves the new owner and the location. If the previous owner has unpaid taxes, the transfer can be blocked. The distance rules do not apply to a transfer of ownership, so a location where a new license would not be issued may still be possible through a takeover.
- Texas — A license cannot be passed to a new owner. The buyer applies anew. Make the contract on the condition "balance payable when the permit is issued".
- New York — There is a practitioner article saying the liquor authority process can extend the transaction schedule by half a year or more. We could not verify the underlying rule.
- Due diligence items — Disciplinary and violation history with the liquor authority, unpaid taxes and liens, permit conditions and expiration dates, the remaining lease term and consent to assignment, fire and building inspection records, and tax returns for the last 3 years.
- Music licenses — Get from the seller in writing which organizations the previous owner had agreements with and whether any amounts are unpaid. Agreements usually do not carry over automatically.
- Price — Statistics from a business brokerage site put actual sale prices of U.S. bars at 2.3–2.7 times seller's discretionary earnings (SDE) and about 0.5 times sales. There are no statistics for noraebang alone. Set the price by the numbers on the tax returns, not by a Korean-style sense of key money.
Sources for this section
- California ABC Rule 61.4 — law.cornell.edu · B&P §23789 — california.public.law
- New York Alcoholic Beverage Control Law §64 — nysenate.gov · SLA 200/500-foot rules — sla.ny.gov
- Texas Alcoholic Beverage Code §109.33 — texas.public.law · TABC FAQ — tabc.texas.gov
- Georgia O.C.G.A. §3-3-21 — law.justia.com
- California ABC, license transfer instructions (ABC-227) — abc.ca.gov
- Lease clauses — Mohr Partners, SCORE
- California CASp — dgs.ca.gov
- Rent — Matthews LA Retail Q2 2026, Crexi, Cityfeet
- Bar sale price statistics — BizBuySell
Limits of this guide
This guide is general information for people preparing to open a business. It is not legal, tax, immigration or real-estate advice. Permits and rules differ by state and city and change often. This text reflects what we found as of October 2026; confirm it with the relevant agency and with your own attorney and accountant before you sign or file anything.
You can ask us first
It is fine if you are still looking at sites. Tell us how many rooms you plan and we will tell you the music licensing fee to put in your budget. Registration is free.