Running a Pub
No-nonsense answers to your pub-business questions
Hand on heart, there is no such thing as a daft question when it comes to running a pub.
As we always say, if your business is successful then ours will be too. So we want to make sure you’re fully aware of what it means to run your own Batemans pub, and the challenges and opportunities it will bring.
If you can’t find the answers you want in our FAQs below, just Ask Stuart or drop us a line with your queries.
Reduced Risk, Business Purchase Agreement
Q. What kind of pubs do you have and where are they?
A. We have a very varied estate, from small community pubs to high-street beer houses, and food-led places to pubs with accommodation. Our pubs are spread across seven counties: Lincolnshire, Norfolk, Nottinghamshire ,Cambridgeshire, Derbyshire, Humberside and Yorkshire.
Q. Why should I take a pub with Batemans?
A. We’re known for our fairness and transparency, which has resulted in us being the first in the industry to have our own accredited code of practice. In fact, it’s been described as one of the best. We stick by our word, we do what we say we’re going to do and we stand firmly by our promises. That is to help you enjoy successful careers – by sharing good honest business values and by giving the service, support and fresh ideas to help pubs thrive. Our business has always been about Good Honest Pubs Run By Good Honest People. Harry Bateman summed this up rather well in 1953, when he told his fellow brewers: “In your business, don’t ever lose the human touch with your staff and tenants.”
Q. Is there any chance of Batemans being taken over or selling out in the near future?
A. No chance! Batemans has been a family business for four generations. A large chunk of the shares have been entrusted into the family, to help secure the business and its values for future generations, business owners and staff.
As Stuart Bateman puts it. “Our family owns this business and we are focused on the Brewery, pubs, publicans and staff thriving for years to come. This means we make decisions which are for the good of all in the short AND long term; we are not here to make short term profits at the expense of the long term and the people we work with. We want future generations of publicans, customers, staff and a family to have the benefit of fulfilling their aspirations and enjoying what we do as a company.”
Q. Do I need experience?
A. Some experience, whether in retail, business or pubs, is certainly helpful. But we have training facilities, to help ensure those without experience can be successful. Passion is the most important qualification!
Q. How much will it cost me to purchase the business at a Batemans pub?
A. Typically, between £8,000 and £25,000.
Q. Why have you launched The Reduced Risk, Business Purchase Agreement?
A. We appreciate that at the moment there is so much uncertainly in the economy, the country and indeed the world, that many people are nervous about changing careers or investing in businesses. The Hospitality Sector has been particularly affected by low consumer confidence, which in turn is deterring people from joining the industry.
We have looked at all the things which may cause concerns and have constructed an agreement which addresses those concerns:
- Ability to buy a business at very low cost
- Energy costs
- Working hours
- Holidays
- Inflation
- Security
- Reward
- Ability to build up a business and then sell it
Q. What am I purchasing?
A. You are purchasing the business, or the ‘goodwill’, which you have the right to sell on to someone else, for a profit.
Q. Am I buying the building?
A. No, the building and inventory belong to the Brewery, as we do not want you to have the burden and expense of having to maintain and repair the building which can be very expensive, particularly if there is subsidence or problems with the roof.
Q. Main difference between ‘Reduced Risk, Business Purchase Agreement’ and Profit Partnership Plus Agreement?
A. With ‘Reduced Risk, Business Purchase Agreement ‘the Business Owner actually buys the business and has the right to sell it on.
Q. Any other differences?
A. With the ‘Reduced Risk, Business Purchase Agreement’ we have had a commitment from some of our suppliers to give further support to those pubs on that agreement, such as utilities support, holiday contribution, cap of price increase, free training, additional discounts.
This involves stocking their brands.
These products are supplied at highly subsidised prices.
Q. So basically, what I am buying is a lease?
A. In essence the ‘Reduced Risk, Business Purchase Agreement’ takes all the good things about a lease and removes the bad things, such as full repairing liabilities and not being able to leave if that is your wish.
Q. What do you mean ‘being able to leave?
A. Well with a normal lease you would need to find a purchaser, but if this is difficult then you retain all the obligations of continuing with your lease. In our case we will buy the business back for a minimum of same price as the original Business Purchaser paid for it, or the price at which it last changed hands, whichever is the least (net of any outstanding balances). If the original purchaser wishes to sell the business back to the Brewery then it must be a minimum of one year since the original purchase.
Q. Can I sell business on straight away?
A. So long as it is a minimum of 3 years from the original purchase and no sooner than 1 year.
Q. You say I need to be in the business for a minimum of 3 years before I can sell it on. How long does the new business owner have to be in the pub, before he can sell it on?
A. He can do so immediately, unless it is within the first 3 years of the original purchase of the business, or within one year of the original purchase of the business.
Q. Is there anything to prevent me from selling the business on?
A. The business can only be sold on after the original Business Owner has been in the pub for a minimum of 3 years.
Subsequent Business Owners can sell on at any time.
You need to have adhered to all of the obligations in the Reduced Risk, Business Purchase Agreement and to any legal requirements. You must also have cleared any debts relating to the business, whether the debts are to us or other suppliers and have maintained the building to comply with all statutory legislation e.g. gas and electric safety certification.
Q. How long can I or a subsequent owner own the business for?
A. For 20 years (based on 2 x ten year agreement back to back) in total from the date of the first purchase. It may then be renewed or passes back to the Brewery, when the Brewery will purchase it back at a minimum of same price as the original Business Purchaser paid for it, or the price at which it last changed hands, whichever is the least (net of any outstanding balances).
Q. Will the 10 year agreement automatically be renewed after 10 years?
A. Yes is will, on the same terms as the first 10 year period, unless the terms of the Reduced Risk, Business Purchase Agreement have been breached.
Q. Do you have to approve who we sell the business on to?
A. We have a duty to ensure they are a ‘fit and proper’ person, credit-worthy and capable of fulfilling the objectives of the Business Plan and the Premises Licence.
Q. If I want to sell the business on what do I have to do?
A. It is important that you take legal advice on this and any legal costs incurred are your responsibility.
We will help and advise with what procedures need to be carried out. Our Head of Retail will be involved and we have extensive documentation we can provide which will assist you. Most of the procedures are covered off in our ‘Eyes Wide Open’ manual.
However, firstly you will need to ensure that you have cleared all your debts.
We need to be notified of your intentions in writing at least three months before the proposed changeover date.
We will require extensive information about the proposed Business Purchaser in order that we can approve the changeover, based on them being credit worthy, a ‘fit and proper person’ and being deemed to have the ability and qualifications to achieve the Business Plan
We must also oversee that the Business Purchaser has covered off their Pre-Entry Awareness Training (PEAT) obligations, as detailed in our ‘Eyes Wide Open’ manual and ensure all the obligations which are involved with taking on a pub, as detailed in the Reduced Risk, Business Purchase Agreement signed by per the original Business Owner and are detailed the Agreement and in our ‘Eyes Wide Open’ manual.
Prior to confirming the sale of the business to the new Business Owner, we must sign off our final approval, having ensured that all obligations have been met and the correct procedures and administration have been adhered to.
Q. What Price can I Sell the Business on for?
A. Unless it is sold back to the Brewery, it is up to you and the purchaser to negotiate the price.
Q. Property and Inventory Condition?
A. You must contact our Property Manager at least three months before the proposed changeover date so that adherence to your obligations can be checked.
You will need to ensure that you adhere to your redecoration obligations and that when the business is passed over to the new Business Owner, the standard of decoration etc is up to the same standard as the original Schedule of Condition, please see Agreement and our ‘Eyes Wide Open’ manual.
You are not only responsible for the decoration etc, but also for the Fixtures and Fittings as detailed in the inventory. When you wish to sell on the business you and we must arrange a valuation of the inventory and should the value have reduced versus the original valuation then you will need to pay to us the value of the difference. This new value becomes the value of the inventory which we will value again when subsequent Business Owner sells on. We will not pay the difference is the value has increased, it is up to you to take that into consideration when selling on the business.
Q. Is the Reduced Risk, Business Purchase Agreement for a new owner, with me or with the Brewery?
A. The Agreement is most definitely with the Brewery and the Agreement must be signed accordingly. The new Business Owner is taking on all the privileges and obligations of the original agreement, which are passed down from Business Owner to Business Owner.
Q. As the first owner, am I responsible for all future debts?
A. No, each subsequent owner takes over all the obligations of ‘Reduced Risk, Business Purchase Agreement’ and for any debts they may incur.
Q. Do I have Security of Tenure?
A. You or subsequent Business Owners have the right to stay at the pub for 20 years from the date of commencement of the original agreement, when the business would then revert back to the Brewery, and we would buy it back at the value of the original purchase price or the value of the last sale, whichever is the least.
Q. What happens at the end of the 20 year period?
A. The agreement is actually 10 years plus 10 years.
The pub reverts back to us, however, we will buy the business back for a minimum of same price as the original Business Purchaser paid for it or the value of the last sale, whichever is the least.
(net of any outstanding balances).
The Business Owner at the time has to fulfil the normal obligations and procedures of a handover from the outgoing Business Owner to the ingoing Business Owner, it just so happens that the Brewery is the ingoer and new Business Owner.
Q. Do I have to pay a rent to the Brewery?
A. Yes, but the rent is subsidised and takes into consideration the property, living accommodation and inventory rent.
Q. Why do I have to pay a rent when I have bought the business?
A. You have paid a very subsidised rate to buy the business, but you have not had to buy the building, or inventory, which the Brewery will continue to have responsibility for and for the cost of major repairs and maintenance.
The rent also covers the private living accommodation which you and your family can live in.
Q. Is the domestic living accommodation included in the business purchase?
A. Yes it is.
Q. How often do you review the rent?
A. There are no rent reviews, but we do adjust the rent by RPI annually, but cap any increase.
Q. Do I have any repair responsibilities?
A. The Brewery is responsible for the repairs to the structure of the property. We are also responsible for external decorations.
You are responsible for upkeep and repair of the fixtures and fittings, which you have not had to purchase, but need to make up any depreciation cost of it when you sell the business on. The subsequent Business Owners will have the same obligations. You are also responsible for the general day to day maintenance of the property.
Q. Do you ever assist with capital investment to help improve the pub and business?
A. We are always open to conversations on how we can both improve our income.
Q. Other than the normal cost of running the business what are the other associated costs I will incur?
A. (Costs may vary, but were accurate at the date of printing).
- Cellar cooling maintenance (£2 per week)
- Buildings insurance (tbc for each property)
- Business insurance (from £14.39 p.wk )
- Valuation fees – stock taker and inventory valuation (£400)
- Fire safety scheme (£9.94 p.wk)
- Health and Safety Scheme (£5.67 p.wk)
- Boiler service scheme (£2.88 per boiler per week)
All the above costs are taken into account when setting the agreement rent.
Q. Do I have to pay Stamp Duty?
A. Stamp duty varies from pub to pub and will be discussed at interview. However, Stamp Duty implications are reduced due to the agreement being 10 years plus 10 years. If there are relevant charges then these are the responsibility of the Business Owner.
Q. Do I have to buy all my drinks products from the Brewery?
A. You are free to buy spirits from where you wish to. The remainder of your drinks are supplied by ourselves; we stock over 1,500 products, and we supply them at very highly discounted prices.
This allows us to subsidise the purchase price of the business and also the rent.
Q. Can you supply guest ales?
A. Yes, in addition to Batemans cask ales we supply a wide range of guest beers AND craft keg beers.
Q. How do we know what price increase may be forthcoming?
A. We cap price increases.
Q. How does your retrospective discount arrangement work?
A. We agree with the Business Owner, what a realistic volume of drinks could be sold each year, and we will pay a bonus of an additional £50 per composite barrel over and above target.
Q. What is a composite barrel?
A. Composite barrelage calculation is made up of;’
- Draught beer, lager, stout, cider, 36 gallons, 165.56 litres
- Wines, 14.5 gallons, 66 litres
- Spirits, 5.25 gallons, 23.8 litres
- Soft Drinks, 24 gallons, 108 litres
Q. Do I take all the Fruit Machine Profit?
A. Yes you do, after the machine provider’s rent/share and other associated expenses of operating machines, but in order to ensure that you get quality equipment and service, machines need to come from our nominated supplier.
Q. Are all of your pubs available on the ‘Reduced Risk, Business Purchase Agreement’ ?
A. We have 2 agreements; ‘Reduced Risk, Business Purchase Agreement’ and Profit Partnership Plus Agreement. Some pubs and publicans are suitable for ‘Reduced Risk, Business Purchase Agreement’ and some for Profit Partnership Plus Agreement. However, we are flexible and can discuss various options at interview.
Q. Would you consider any of these on a Profit Partnership Plus Agreement instead?
A. Yes – They are already available on one of our Profit Partnership Plus Agreements but we would be open to discussion about, the Reduced Risk, Business Purchase Agreement, however this does not suit all pubs or publicans.
Q. Will existing Batemans Pubs operators have the ability to change to the ‘Reduced Risk, Business Purchase Agreement’?
A. They are already on one of our Profit Partnership Plus Agreement, but we will be open to discussions about a possible transfer, but the Reduced Risk, Business Purchase Agreement does not suit all pubs or publicans. We would explain the terms and conditions of the Reduced Risk, Business Purchase Agreement with the sitting Business Owner.
Q. Do you have a Code of Practice to cover the ‘Reduced Risk, Business Purchase Agreement’?
A. Please refer to our ‘Eyes Wide Open’ manual. The agreement also complies with the Pubs Code 2016
Q. Can I have a copy of the agreement?
A. We will provide you with a ‘Heads of Terms’ document for you to consider, prior to then providing a copy of the agreement.
Q. Do I have to wait until I’ve signed the full agreement before I can take over the pub?
A. No, you can take over the business initially on a short term Tenancy at Will after signing the ‘Heads of Terms’.
Q. You say that you will pay up to £1,000 towards utility costs?
A. Yes, for the first three years of the agreement. However, after a six monthly review we may contribute a further £500 for the half year. So total contribution can be £2,000. The level of support is dependent upon the level of the charges and reasons for the extent of the charges, and you adhering to conditions.
Q. What are the conditions?
A. TThe conditions are all in your business interests. You need to sign up with Calmax Accountancy and provide financial information to them, to help ensure your business is healthy.
There are also certain operating standards you will need to adhere to, such as opening hours.
We will also review this periodically and consider further contribution of + £500 per 6 months, if the pub is trading to business plan levels, usage is not excessive, and you are engaging with the services of our utilities agent.
Q. Do you offer further assistance regarding utilities?
A. We review the utility costs every 6 months and if costs exceed our forecast and are proportionate to target turnover we will contribute half of the additional cost up to £500 every 6 months .
We also pay for a professional utilities consultant to arrange your contract rates and oversee your account.
Q. You say you will pay up to £1,000 towards a family holiday. How will you pay this and will you pay it every year?
A. We need to agree to the level of contribution prior to you booking and then provide receipts so that we can reimburse you.
We will pay this for the first three years.
Full payment is made if you are adhering to conditions below.
Holidays may be in our own Holiday Cottages, which will be discussed.
Q. Are there any conditions?
A. TThe holiday financial support will only run for the first three years of the original agreement being signed.
The conditions are all in your business interests. You need to sign up with Calmax Accountancy and provide financial information to them, to help ensure your business is healthy.
There are also certain operating standards you will need to adhere to, such as opening hours.
The utility financial support and holiday financial support will only run for the first three years of the original agreement being signed.
The conditions are all in your business interests. You need to sign up with Calmax Accountancy and provide financial information to them, to help ensure your business is healthy.
There are also certain operating standards you will need to adhere to, such as opening hours.
Q. You state £800 worth of free training?
A. We hold courses at the Brewery which you and your staff are welcome to attend, to the value of minimum of £400.
These cover; cellar management, licensing, finance, cellar management, drugs control, stock taking, employment law, utilities.
Or if there are other courses which you would like to attend (e.g. Personal Licence) then we will pay for these for you up, to a value of £400.
Q. You say that I will have a minimum of 2 days off per week?
A. Since Covid lockdowns, pub visiting habits of customers have changed, with certain days of the week being very slack and certain days of the week being much busier. Business plans are therefore drawn up, and the rent adjusted accordingly to allow for the pub to be closed for 2 days per week. This is not compulsory, but the business plan and rent allow for this. If the Business Owner sees an opportunity and wishes to open for 7 days a week, that is at their discretion and does not affect the rent.
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