News Bite

A License To Go Out Of Business? Michigan Retailers May Need One

Stores must get a city permit to hold a ‘going out of business’ sale

If a retail business wants to hold a “going out of business” sale in this state, it better be going out of business. If not, its owner could be risking a five-year prison sentence under a state law Michigan legislators enacted back in 1961.

A retail business has to get a license to hold a “going out of business sale.”

And owners could get in trouble if they try to hold more than three such sales.

That does not mean a firm must immediately close its doors when the sale ends, however. Although the “going out of business sale” license has a termination date, a merchant can still remain in operation.

But the store is prohibited from adding inventory or ordering goods during, after or in anticipation of the liquidation sale, and it can’t sell any merchandise not listed in the license application. The license is valid for 30 days and a firm can get two 30-day extensions.

A merchant who applies for the going-out-of-business-sale license must declare that the store will discontinue business afterwards. Entering a false statement on the application is punishable by up to five years in prison.

It can get complicated though. There have been court cases where it was decided that if a business does not state it is going out of business on the license application, it does not have to close.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.