Running a Pub
A partnership you can trust
Our forward-thinking pub tenancy agreements are bound by good, honest business values. That’s always been our way. As the first brewer in the country to hold an accredited code of practice for our tenants, we’ve helped to lay the foundations for fairness in the industry.
Tenancy agreements tailored to you
We call our tenancy model Profit Partnership Plus (PP+), and as part of this we offer various types of agreement to suit the different needs and circumstances of our prospective business owners. Whatever your aspirations, these agreements are designed to reward you for running a successful pub.
A PP+ agreement could be perfect for you, whether:
- You’re new to the trade
- You have small financial resources
- You’re looking for the financial benefits offered by assignable leases
- You have significant capital to invest and may be looking at freehouse
Types of agreement
With a PP+ agreement, there are no rent reviews, no confusing loopholes and none of the risk attached to leases and freeholds. You’ll also benefit from free-trade ‘cash and carry’ pricing and award-winning business support.
There are various options involved:
Standard Three Year Tenancy
- Renewable every three years at your discretion
- Security of tenure
- Low cost ingoing
- No rent reviews
- Free-trade ‘cash and carry’ pricing
Goodwill Creation Arrangement
- Works in conjunction with the PP+ agreement
- Provides some of the financial benefits related to an assignable lease
- No premium to pay
- Additional reward for developing the business
- Payment for increasing the profit of the pub over agreed level
Working alongside our PP+ agreement, the Goodwill Creation Arrangement offers you an added reward for developing aspects of your pub beyond drinks sales – food and accommodation, for example.
At the start of your tenure we’d agree a realistically achievable profit for the pub, known as the Fair Maintainable Profit (FMP). Then, if on a third anniversary you can demonstrate (through audited accounts) that you’ve surpassed the agreed FMP during the previous two years, you’ll be rewarded with a payment of 50% of your average annual excess.
Here’s an example
|Year 2 actual||£41,000|
|Year 3 actual||£43,000|
Once this option is exercised, you can continue running the pub under your PP+ agreement.
Capital Investment Arrangement
- Rewards you for investing in your pub
- On leaving the business we’ll return your capital investment
- And pay you the percentage by which you increase the turnover
The Capital Investment Arrangement offers you an incentive for investing your own money into the structure of the pub.
When you’re ready to invest (usually the level is no more than £50,000), and the project has been agreed in writing, we’d agree a target for the anticipated increase in turnover.
Then if you can demonstrate (through audited accounts) at any anniversary (or agreed date) that you’ve exceeded that target, you’ll have the right to ‘call in’ your original investment – with interest paid by us at the same percentage rate as the percentage increase in turnover.
Here’s an example
|Year 2 actual||£250,000|
|Year 3 actual||£350,000 (+40%)|
|Average excess||£20,000 + 40% = £28,000|
Once this option is exercised, you can continue running the pub under your Profit Partnership Plus agreement.
Fixed Term Agreement
- Gives time to assess whether the pub trade and/or the pub is right for you
- After five months and 25 days, you can leave or enter into a longer-term agreement
This is an introductory agreement, which we offer for a variety of reasons. For example, as a ‘taster’ for less experienced publicans or for when a prospective business-owner doesn’t have the funds needed for a full investment.
This agreement isn’t automatically renewable and isn’t bound by the regulations of the Landlord & Tenant Act (1954).
We’ll discuss with you which agreement is best for your business plans and the kind of pub you’d like to run. If you have something else in mind, we’re willing to consider reasonable variations to our agreements.
What to expect from Profit Partnership Plus
Profit Partnership Investment
Rather than buy the fixtures and fittings (the inventory), as per the industry’s outdated tenancy terms, you would ‘purchase’ the business as an investment. The value of that investment would reflect the potential earnings of the business.
As a self-employed business owner, you would take all the retail profit and be responsible for the repair, maintenance and depreciation of the inventory. Meanwhile, we would be responsible for the structural repair and maintenance of the building.
You can take advantage of this arrangement as part of any type of agreement. If you don’t have the full amount needed for a Profit Partnership Investment, we can make arrangements to offset the shortfall. Alternatively, if you’d rather take the traditional route, we can offer an arrangement that involves purchasing the inventory (see ‘Investing in a Pub Business’ in our Frequently Asked Questions for more information).
No rent reviews
With a Profit Partnership Plus agreement, your rent won’t rise by more than the rate of inflation (retail price index) for as long as you, as the business owner, are in the pub and working to our Profit Partnership Eyes Wide Open Manual.
All of our agreements (apart from the Fixed Term or Tenancy at Will options) are subject to the Landlord and Tenant Act (1954), which gives you the automatic right to renew the agreement at the end of each term, providing you’ve fulfilled your part of the agreement and followed the statutory renewal procedures and notices.
Your Profit Partnership Plus agreement, to all intents and purposes, would belong to you as the business owner – unless you decide to terminate it.
As the landlord, we can only serve notice to terminate your agreement on specific grounds; for example, if you’ve breached the agreement or if we want to redevelop the pub or get it back for our own use. In the unlikely event of us serving notice to take the site back, you would receive compensation.
With all of our agreements, apart from the Fixed Term or Tenancy at Will options, you have the right to leave on completion of your third year, and at every three-year period thereafter. You would need to ensure you serve notice to us between six and twelve months before the three-year date.
Whichever type of agreement you go for, you’ll be able to benefit from paying free-trade ‘cash and carry’ prices for your drinks.
As a business owner, you would receive an attractive 50% share of all fruit/gaming machine profits.
Committing to an agreement
Once an agreement has been entered into, there’s no ‘cooling off’ period. So before either of us signs on the dotted line, we’ll go through all the implications of the chosen agreement, ensuring that you’re clear on your responsibilities, as well as ours. Then we’ll confirm this in writing for you to consider.
Once the agreement is signed, we’ll commit ourselves to helping you develop your business to its full potential.
Should you suffer a significant downturn in trade, we’ll arrange for a full review of the business – then offer any support that may be needed.
Ready to discuss the options? Get in touch to arrange a chat with us.