Monthly Archives: February 2018

Assigning a Pub/Commercial Lease and the Pitfalls, Part 2, Dilapidations

Barrel-dregs 2

Assigning a Pub/Commercial Lease and the Pitfalls, Part 2

Dilapidations

With the advent of the Pub Co’s and tied leases, a new problem entered the industry on a large scale, previously Brewers had short term tenancies with limited responsibilities and the tenant was not responsible for repairs and structural faults, only painting and decorating, the rent was set at the length of the tenancy or reasonable terms.

The tenant and family lived on the premises and knew that their commitment was for a limited period without onerous responsibilities that went with a present day tied lease.

With commercial leases the majority of lessees are responsible for all structural repairs and any faults that appear during the term of the lease, unless the fault had been identified during the initial survey.

Dilapidations are the real sting in the tail, unscrupulous Landlords always try to exploit the dilapidations claim, it normally includes the landlords admin fee in addition to the actual cost of the dilapidations, which can be a percentage of the repairs.

All improvements made may have to be removed if not agreed in detail with the landlord, we took a new factory with an inadequate electricity supply, we upgraded it with permission and the proviso that if the factory was assigned that it all had to be removed and put back to it’s original state.

The obvious thing to do is ensure that your original surveyor tells you what needs doing and get your own builder to carry out repairs before the landlord or his surveyor get involved, when assigning negotiations are approaching completion.

I had a call some years ago from a lessee who was about to assign the lease, a customer was sitting quietly on the other side of a partition in the bar and heard the Area Manager and Surveyor talking.

The Area Manager said that there was a £10K deposit which they did not want to give back, would the Surveyor ensure that the dilapidations bill was in excess of £10K, which is easy enough to achieve in an old pub.

I phoned the Regional MD of the company, who I had met on several occasions, and told him that the lessee had an independent witness to this conversation with names, he denied such activities were used in dilapidations and duly ensured the lady had her deposit back.

I had two more similar dilapidations both with lady lessees, both properties were in excellent condition, far better than when the lease started, a couple of phone calls and the dilapidations were dropped, not the same company.

The leases were assigned with no dilapidations, any work that needed doing had been done by the lessees builders.

One lessee had a letter saying the deposit would be paid in 28 days, nothing appeared, I checked with my colleague who is a Commercial Lawyer.

He said that the company were not obliged to comply with the 28 days, it took two months to get the money and several phone calls and an article under “Barrel-Dregs”, the deposit as far as the Pub Co was concerned is better in their account than in a departing lessees account.

The law changed a few years ago, if a landlord does not spend the whole of the dilapidations bill claimed, if the landlord does not spend any of it, it is refundable to the lessee.

If the property is scheduled for a total refurbishment/reconstruction/change of use, they cannot claim dilapidations, see the connecting links for an accurate description of what a landlord can or cannot do.

These Links are worth reading and understanding, before the landlord produces a dilapidations bill.

Dilaps 1 Scottish Lawyer

Dilaps 2 London

Dilaps 3 UK

Dilaps 4 Barrel-Dregs

Dilaps 5

Authorised Guarantee Agreement (AGA) LINK

Other Issues LINK

 

Assigning a Pub/Commercial Lease and the Pitfalls, Authorised Guarantee Agreement (AGA)

Bad Beer For Export

Assigning a Pub/Commercial Lease and the Pitfalls, Part 1

Authorised Guarantee Agreement (AGA)

Introduction:- Most people, when they decide to take the plunge and become Self Employed in a Retail Business, end up taking a Commercial Lease, unless they have enough money to buy a Freehold.

By Retail, this includes licensed, catering, accommodation, dry goods, clothing etc., it also includes manufacturing.

The comments in this article and the additional articles do appear to have a bias towards licensed commercial property, the reason being that would appear to be more vulnerable, because of having domestic accommodation and families living on the premises, commercial properties without domestic accommodation, in some cases are easier to assign.

A solicitor will brief you on the basics of your responsibilities on taking a commercial lease and very few stress the onerous responsibilities when you assign it.

They give you a copy of the lease to read and digest, at that stage you are nearly committed to take on your new career or project and assume that thousands of small business people have taken this step before you and survived.

A lot does depend on the Landlord, private landlords are often a lot easier to negotiate with, large companies can make things very difficult and costly.

Firstly always have a survey with photographs and agree this in writing with the landlord or his representative.

I made this mistake when I took a lease from a private landlord on a lock-up sandwich bar, there was nothing to it apart from a basement that had not been used for forty years, the freehold was sold to a large property company, who threw the book at me when I went to assign the lease with historic dilapidations in the basement, I couldn’t prove a thing because I did not have a survey.

Secondly always ask your solicitor about anything that you don’t understand in the lease, don’t let him tell you that it’s a standard commercial lease, it mat well be, but you still need to understand your commitment when you assign the lease.

AGA’s:-Privity of Contract is a very nasty clause, fortunately it was banned some years ago in new Commercial Leases and replaced by the Authorised Guarantee Agreement (AGA), it may still exist in some old leases.

Privity of Contract makes the assigning lessee responsible for all the new lessees until the conclusion of the lease in simple terms.

The AGA (Authorised Guarantee Agreement) makes the assigning lessee responsible for the duration of the new lessee and is released only when the lease is assigned to another lessee.

I had the local Licensing Officer ask me whether I could stop a Pub Company from taking an elderly couples bungalow after assigning their Pub Co lease about eight years before, because the lessees had gone bankrupt, we did manage to stop the Pub Co.

At the time the Pub Co’s were increasing rents to unrealistic levels and lessees were and are struggling, the new legislation is now having some effect on rental levels, but a vast amount of damage was done to good licensees, who have now left the industry and many that are left are struggling to make profits that vaguely equate to the enormous amount of hours that they work.

The landlord insists on references etc. on any new lessee, yet avoid any financial responsibility, because they can legally recover any of their losses from the assigning lessee, unless the lease has expired.

If you are a partnership or sole trader you can and will be hounded by certain companies for any shortfall caused by your assignee, so it is essential that you are happy with the financial state of your assignee and their ability, not that it is guarantee of their business ability.

If you have a Limited Company for the purpose of leasing a commercial property and assign, then close down the company the landlord can do nothing to recover any shortfall by the assignee, unless they have one or all of the Directors of the Ltd. Company underwriting any shortfall, which is to be avoided.

Certain lessees with hard nosed landlords, have assigned the lease then quit the country, certain property owning companies have long memories unfortunately.

In this computer and Internet Age people can be very traceable.

I personally think the AGA should be dropped from all commercial leases, those with Limited Companies can walk away, partnerships and sole traders cannot with the law as it stands at present.

Some Pub Co’s will allow you to buy out of the AGA, it has now become a revenue source and the price can vary from one company to another.

Looking at the AGA logically, if a lessee can buy themselves out of it, the AGA has minimal practical value to the Landlord except to extract additional cash from the hapless lessee.

The AGA in my opinion should be removed from all commercial leases where domestic accommodation is involved and families live on the premises.

Click on this link for legal information on AGA’s

Dilapidations LINK

Other Issues LINK

Questions with Answers before you take a Commercial Lease (Part 2)

 

Questions with Answers before you take a Commercial Lease (Part 2)

This Second Copy is for reference, we would suggest that you keep this copy with you in any meeting with the Landlord or his Representative.
These Answers are for your guidance, they are our thoughts so that you may be able ask suitably direct questions and get answers that you understand.
If a Landlord refuse to complete the form, leave blanks to questions or evasive answers, don’t have anything to do with that company, our aim is to get fairness and honesty, if possible back into the Industry.

The Lease.

1. What happens if I fail to pay the rent?

You are normally evicted at very short notice within the terms of the lease, you do not have the protection of Residential Property, even though you may be living on the premises. All rents are paid in advance, normally between one month to three months, usually by standing order or direct debit.

Landlords Answer:-

2. What happens if I fail to pay the Business Rates?

Then local Authority will take you to court eventually, if you do not have enough money to pay they will put the Bailiffs in, who will take goods to the value of the debt with costs. They normally remove part or most of the Fixtures and Fittings (F&F), this affects the Landlord because the property within the lease conditions has to have enough (F&F) to continue trading, you cannot sell or remove the bulk of the F&F, even though you paid for them, depending on the lease wording.

Landlords Answer:-

3. Why do I need a Survey?

Everyone buying a commercial property, especially a lease should have a Schedule of Condition, to validate the state of condition PRIOR to the handover date. If there are outstanding wants of repair or decoration, then either the Landlord or the previous Lessee is responsible, if it is left until a later date, no action can be taken without documentary proof agreed with the Landlord or his Agent. We have had certain BDM’s who claimed that a Survey was carried out at each Lease Assignment, this was not true, the lessee had nothing in writing or a copy of the so called survey.

Landlords Answer:-

4. Why do I need dated photographic evidence of any survey faults?

Normally a surveyor will have dated and photographic evidence of any areas that are of concern, but you need copies agreed with the Landlord at that time. If you do not and the original surveyor is no longer available, you may have problems when the Landlord claims for dilapidations at the end of the lease or assignment.

Landlords Answer:-

5. Why do I need approval to carry out improvements to the property?

You must have the Landlords written approval for all alterations or improvements, otherwise he can insist that it is all put back the way it was at the start of the lease.

Landlords Answer:-

6. Can I sell or change the Fixtures and Fittings (F&F)?

If the property had no F&F whatsoever and you have brought them in, you can do what you like with the F&F. If the F&F are listed with the lease, you can sell or change them, because you have paid for them, but they must be replaced so that the business can continue trading. You need a legal explanation of what you can do without breaching the terms of the Lease.

Landlords Answer:-

7. Why do I have to pay a deposit to the Landlord and how much?

Please click on the link for a general guide to commercial lease deposits Rent Deposit Article June 2011

Landlords Answer:-

8. What is the Authorised Guarantee Agreement (AGA) and the implications for me?

This is a nasty sting in the tail, when you assign a lease, it makes you responsible for any losses incurred by the Landlord caused by the assignee for the duration of their time as lessee on your original lease. It is possible, with some Landlords to buy yourself out of the AGA, it is now being used as source of additional revenue by some and it is worth finding out how much it will cost you.

Landlords Answer:-

9. Do I have to use the Landlords Insurers?

With Landlords owning a lot of properties they frequently have a clause in the lease saying that you have to use their insurers, in a number of cases, in stead of being cheaper it is more expensive than doing it yourself through an independent insurance company. If you do insure the property yourself the Landlord will insist on being notified on the policy, should you fail to pay the premium, they are normally given a short period to obtain cover.

Landlords Answer:-

10. Does the Landlord have right of entry to the premises at any time?

It depends on the terms of the lease, though a landlords inspection is normally notified in writing. This can happen at short notice if the Landlord has reason to believe that the property is being neglected, used for questionable activities or unauthorised alterations.

Landlords Answer:-

Rent Reviews

11. Do I need professional Advice on a Rent Review?

You always need professional advice when you have a Rent Review, it can be a complete Minefield. It is worth putting money aside for rent or rating reviews, the costs can escalate, depending on the Landlord/Property owning Company.

Landlords Answers:-

Please note, access to this site is totally free if you would like to subscribe (No Charge) on www.buyingapub.com, they are free to be read for your guidance and aimed to help you get through a time of considerable pressure and demand.

ALMR echoes Committee’s call for Brexit clarity, possible Welsh Tourism Tax

Committee’s call for Brexit clarity, possible Welsh Tourism Tax

The ALMR has echoed the sentiments of the Home Affairs Committee’s report on delivery of Brexit and called on the Government to provide more clarity on ongoing and future processes.

The Committee has called for detail on a range of issues including the legal status of EU and EEA citizens in different circumstances. These range from issues pertaining to the length of individuals’ current residence in the UK, to the timing of their registration to remain in the UK, family reunion rights and addressing periods spent outside of the UK.

ALMR Chief Executive Kate Nicholls said: “The Committee’s report rightly raises a number of questions that must be addressed by the Government. At present, there is still too large a grey area regarding the rights and status of non-UK EU nationals and the detail of the post-Brexit immigration system.

“The Government has made some steps to provide reassurance, but employers and employees still need a great deal more clarity. The Committee has called on the Government to provide more detail and it is vital that we get a positive response, so as to allow businesses and their team members time to plan ahead.”

 

Kate Nicholls, CEO of the ALMR, the leading voice for the UK’s eating and drinking out sector, comments:

“This is a welcome decision and credit must go to Hospitality Cymru for leading efforts to secure it; although the Welsh Government would show more pragmatism if it abandoned the idea completely.  A Tourism Tax would only heap costs on businesses and customers and make tourism in Wales much less attractive and competitive. The ALMR will continue to oppose the tourist tax and I hope that Governments all around the UK will act positively to avoid the introduction of such a flawed and unserviceable measure.”

ALMR

 

JG&Partners, The Licensing Officer Scam!

 

The Licensing Officer Scam!

Posted: 13 Feb 2018 09:00 AM PST

Swale Council have recently written to their licensees to warn against a confidence trickster operating in their area. The scam involves a criminal attending the premises and posing as a Licensing Officer, demanding payment of the licence annual fee in cash. As with many successful scams the proposition is plausible and the person making the demands appears to know a number of relevant facts …

Pub Co’s, “Have they hit the Wall of Reality”, Barrel-Dregs.

Bad Beer For Export

Pub Co’s, “Have they hit the Wall of Reality”, Barrel-Dregs.

My sources in the Pub Co world tell me that certain Pub Co’s may well have “Hit the Wall of Reality” and things are not happy in the individual Camps, are well it had to happen at some stage, you can’t keep milking a cow after the udders are dry, my farmer friend has always reminded me.

Their policy, has in the main been that Licensees were a an expendable commodity,  they had peddled from Day One that buying a lease was the way to earn Serious Money and incredible Capital Gains, when they eventually sold the lease, a few did in the early days, statistically the majority didn’t.

Leases in the main are now a millstone round most licensees necks, the rents were and are outrageous, the terms of the leases draconian.

The BDM’s in many cases had no experience of running pubs profitably, many were ex sales people, well experienced in debt collecting, this suited the Pub Co model, as long as licensees were expendable.

The Senior Pub Co Management were and are Money Men, not like the genuine brewers who knew exactly how much beer they could expect to sell in their catchment area.

Tied Pub Leases, were almost unheard of until the Pub Co’s came on the scene, you had freehouses, brewery tenancies and untied pub leases.

Discounts were minimal, credit was one calendar month, with freehouses it was a great career with substantial capital growth, if you were a good operator you could float a reasonable amount of working capital by using your credit terms sensibly, not so with Pub Co leases, two weeks credit, after that the Pub Co debt collector is on your doorstep.

The good old Family brewers treated good licensees as their key to a successful company, they were brewers of beer, and the more successful a Licensee became the more profit they all made.

The brewers system was a short term Tenancy at sensible rents, that gave reasonable operators a profitable career for life, sadly many of the family brewers have jumped on the Pub Co Bandwagon or been bought out by the money men, the breweries have been demolished and converted into expensive housing.

A number of family brewers still operate and some still observe the principle that good  licensees are the key to good business.

Back to “The Wall”, it would appear the amount of people having been made redundant clutching their redundancy money in their hands, has dropped dramatically.

Redundant people were a very soft target for Pub Co’s, a career change taking on your local pub, not anymore, the others were South Africans getting away from the many problems in South Africa.

It would appear that the rush of potential licensees with cash has diminished, too many good operators have left the industry, never to return, the Pub Co’s can only blame themselves, what was a safe career is now a highly precarious one with a Pub Co Lease or even a tenancy is highly questionable.

We have had too many good operators pouring their hearts out in despair at Pub Co policy and questionable tactics.

The draconian leases and lousy trading conditions, you can’t just give up and assign a lease, you’re responsible for the incoming lessee financially, added to the dilapidations, in many cases think of a number double it and clobber the outgoing lessee for whatever little he has left, in some cases the work was not carried out and passed on to the unknowing new lessee, this is illegal and worth pursuing with a good surveyor.

I had been called in to a distraught lessee, where the BDM told the lessee that the company carried out a survey at every change when he took on the lease,  he saw no need to get an independent survey, the historic dilapidations were a nightmare which the Pub Co tried to claim for, the BDM had been moved to another area and denied all his previous statements.

It would appear not only are potential licensees avoiding Pub Co Leases, but the BDM’s are leaving for a quieter life, not that many of them were a help to the struggling lessees.

It also appears from a stressed Area Manager that one Pub Co has the highest number of managerial staff off on sick leave, maybe they should merge with the NHS.

The current Flu epidemic, may be used as the excuse, but my sources tell me that stress and dissatisfaction with lower managements limited responsibility to make a decision, whilst senior management have little or no idea and over rule most decisions made, sounds like the First World War, where the troops at the front were Cannon Fodder and the Generals sat at the back totally unscathed.

This leaves the remaining managers running round vast unmanageable areas like “Headless Chickens”, however much they try.

They cannot make a decision of any degree of importance without the Blessing from the Almighty, who may also be on Sick Leave according to Potboy, who is normally spot on with his info.

If this info is correct and I have no reason to doubt it, BDM’s and Lessees will be in greater demand and without them the tree will start to shake.

Some Pub Co’s are making realistic deals at long last, subject to confidentiality agreements, in case other lessees catch on.

One Pub Co that I have crossed swords with on a number of occasions, substantially reduced the rent on a pub going through an appeal and then offered to give £150 per barrel discount across the board to keep the lessee, I don’t like the Pub Co, but if they act that way they will get my full backing, it’s a serious step in the right direction if correct, and I am assured it is.

The overall business is shrinking from the Trade Press, it’s time to change, sadly it won’t, the Pub Co attitude has gone too far off line for senior management to change, many have taken vast sums out of the industry, which has become endemic, but without good front line management and good licensees the whole system could start crumbling.

There is more next week, but it appears “The Wall” could be in danger of tumbling, unless a different approach is taken very quickly.

The attempts by most Pub Co’s to circumvent the Government Legislation may come home to roost with a vengeance, if they have no front line managers and even less licensees.

Barfly

Historical Note:-

Lease with a Sting in the Tail LINK

The Great Pub Co Con LINK

BD Less savoury.eps

The views expressed are not necessarily the editors and www.buyingapub.com accepts no responsibility for them, we do try to avoid offensive or litigious statements being made. They are written by concerned professionals in the industry who feel that these issues should be raised to ensure that all licensees are made fully aware of many hidden pitfalls. 

copyright (©) 2018, www.buyingapub.com

ALMR reacts to Government employment plan

ALMR

ALMR reacts to Government employment plan 

The ALMR has responded to publication of the Government’s Good Work plan and welcomed steps to address illegal use of unpaid interns but called on the Government to provide additional clarity for businesses.

ALMR Chief Executive Kate Nicholls said: “This is a welcome, proactive approach from the Government in an area that many employers and employees feel passionately about. We do not want to see abuse of internships, and action to ensure that employees are paid should help increase transparency and confidence across businesses. We do, however, need to see more guidance on issues like work experience where young people, particularly those still at school, are being offered short-term placements in businesses as these can provide a valuable first taste of work.

“We want to make sure that these opportunities are still available and that businesses are fully aware of their responsibilities. We will be working with the Minister to ensure that information is readily available and communicated to the sector.”

The ALMR has also responded to the Government’s measures to address perceived deficiencies in flexible working practices.

Kate Nicholls added: “This approach from the Government will bring some peace of mind to workers looking for reassurances and will ensure that businesses that need to employ people flexibly will still have the opportunity to do so. Hospitality businesses often rely on flexible working to suit seasonal demands and in our discussions with members we have found that this suits both employers and employees.

“The Government has, however, missed an opportunity to overhaul NICs for younger workers that would benefited both workers and businesses looking to invest in staff. Scrapping NICs for under-25s would have put more money into pockets of staff members and freed-up money for businesses to invest in their teams.

“Any changes to the rate of National Living Wage or Minimum Wage for flexible workers should come as a result of appropriate consultation and assessment by the Low Pay Commission and should reflect economic circumstances and be affordable for businesses.”

Questions with Answers before you take a Tied Lease (Part 2)

 

Questions with Answers before you take a Tied Lease (Part 2)

This Second Copy is for reference, we would suggest that you keep this copy with you in any meeting with the Pub Co/Landlord or his Representative.
These Answers are for your guidance, they are our thoughts so that you may be able ask suitably direct questions and get answers that you understand.
If a Pub Co/Landlord refuse to complete the form, leave blanks to questions or evasive answers, don’t have anything to do with that company, our aim is to get fairness and honesty, if possible back into the Industry.

The Lease.

1. What happens if I fail to pay the rent?

You are normally evicted at very short notice within the terms of the lease, you do not have the protection of Residential Property, even though you may be living on the premises. All rents are paid in advance, normally between one month to three months, usually by standing order or direct debit.

Landlords Answer:-

2. What happens if I fail to pay the Business Rates?

Then local Authority will take you to court eventually, if you do not have enough money to pay they will put the Bailiffs in, who will take goods to the value of the debt with costs. They normally remove part or most of the Fixtures and Fittings (F&F), this affects the Landlord because the property within the lease conditions has to have enough (F&F) to continue trading, you cannot sell or remove the bulk of the F&F, even though you paid for them, depending on the lease wording.

Landlords Answer:-

3. Why do I need a Survey?

Everyone buying a commercial property, especially a lease should have a Schedule of Condition, to validate the state of condition PRIOR to the handover date. If there are outstanding wants of repair or decoration, then either the Landlord or the previous Lessee is responsible, if it is left until a later date, no action can be taken without documentary proof agreed with the Landlord or his Agent. We have had certain BDM’s who claimed that a Survey was carried out at each Lease Assignment, this was not true, the lessee had nothing in writing or a copy of the so called survey.

Landlords Answer:-

4. Why do I need dated photographic evidence of any survey faults?

Normally a surveyor will have dated and photographic evidence of any areas that are of concern, but you need copies agreed with the Landlord at that time. If you do not and the original surveyor is no longer available, you may have problems when the Landlord claims for dilapidations at the end of the lease or assignment.

Landlords Answer:-

5. Why do I need approval to carry out improvements to the property?

You must have the Landlords written approval for all alterations or improvements, otherwise he can insist that it is all put back the way it was at the start of the lease.

Landlords Answer:-

6. Can I sell or change the Fixtures and Fittings (F&F)?

If the property had no F&F whatsoever and you have brought them in, you can do what you like with the F&F. If the F&F are listed with the lease, as with a Pub Co Lease, you can sell or change them, because you have paid for them, but they must be replaced so that the business can continue trading. You need a legal explanation of what you can do without breaching the terms of the Lease.

Landlords Answer:-

7. Why do I have to pay a deposit to the Landlord and how much?

Please click on the link for a general guide to commercial lease deposits Rent Deposit Article June 2011

Landlords Answer:-

8. What is the Authorised Guarantee Agreement (AGA) and the implications for me?

This is a nasty sting in the tail, when you assign a lease, it makes you responsible for any losses incurred by the Landlord caused by the assignee for the duration of their time as lessee on your original lease. It is possible, with some Landlords to buy yourself out of the AGA, it is now being used as source of additional revenue by some and it is worth finding out how much it will cost you.

Landlords Answer:-

9. Do I have to use the Landlords Insurers?

With Landlords owning a lot of properties they frequently have a clause in the lease saying that you have to use their insurers, in a number of cases, in stead of being cheaper it is more expensive than doing it yourself through an independent insurance company. If you do insure the property yourself the Landlord will insist on being notified on the policy, should you fail to pay the premium, they are normally given a short period to obtain cover.

Landlords Answer:-

10. Does the Landlord have right of entry to the premises at any time?

It depends on the terms of the lease, though a landlords inspection is normally notified in writing. This can happen at short notice if the Landlord has reason to believe that the property is being neglected, used for questionable activities or unauthorised alterations.

Landlords Answer:-

11. Why do I have to have Brulines or similar as a monitoring system?

All Tied Pub owning Landlords are terrified of lessees Buying Out, because they know that products can be bought substantially cheaper, by dealing direct with suppliers. The fines that they impose are normally far in excess of any additional profit made. There are many articles on the inaccuracy of monitoring systems, which means that flushing gallons of water though the beer lines on cleaning, can cause questionable results.

Landlords Answer:-

Training.

12. How many qualifications do I need to take and which ones?

You only need the basic Licensing Exam to get a licence from the Local Authority, you need the EHO Food and Hygiene course, plus everyone involved in dispensing or preparing consumable products, always check with the EHO that your business will be in, their requirements can vary. If you are not sure where your business will be, your local EHO will give you guidance. In addition Cellar Management.

Landlords Answer:-

13. How long will these courses take and how much do they cost?

The cost of courses can vary from area to area ,

Landlords Answer:-

14. How much training will I get after I have taken on the lease?

It is essential to get additional in house training, the initial training does not make you a Reasonably Efficient Operator (REO), this only comes with experience and further training.

Landlords Answer:-

15. How much training do I need to become a Reasonably Efficient Operator (REO)?

Landlords answer:-

You would need about three years profitable trading, with basic qualifications to comply with obtaining a licence and ideally on site training, which many companies do not do, they may send you details of changes in the Licensing and EHO legislation. Three years profitable trading was defined by the then Chairman of the BII, be assured you need that experience.

Landlords Supply Tie

16. What is the Supply Tie?

The supply Tie is everything declared in the lease, normally it is wet stock (Beer, Wine, Spirits, Soft Drinks etc.)

Landlords Answer:-

17. How much credit do I get with the Supply Tie?

Normally fourteen days with a lease, with a genuine Freehouse as much as one calendar month.

Landlords Answer:-

18. Do I get any discount?

Before you take a Tied Lease is the only time that you can ensure in writing that you will get a discount, they may give you a discount if you are trading above expectations, but don’t rely on that, all companies have different policies and again it is written in the lease. Normally very little discount is passed on. 

Discount has for many years been minimal, just recently some Pub Co’s are making concessions on discounts. As a rough guide most Pub Co’s get in excess of £250 per 36 gallon barrel, I received that level of discount with my small company some years ago.

The discount figures are not disclosed, if you do 200 barrels a year that equates to £50K being added to your rent, if they gave £150 per 36 gallon barrel, it will still equate to £20K on your rent. Lack of discounts cut down the competitiveness of your pricing.

Landlords Answer:-

19. Do the discounts get included in the so called divisible split of profits?

They are conveniently ignored and go to the Landlords profits. The divisible split is ignored in respect of landlords contribution.

Landlords Answer:-

20. Can I buy out in an emergency?

No, unless the BDM gives written permission, do not buy out under any circumstances, the fines are draconian, in a number of cases the beer monitoring system has been inaccurate or too much water has been flushed through the beer lines giving false readings.

Landlords Answer:-

21. What happens if I can’t pay my Supply Tie Account?

You normally go to Cash with Order, which ruins your cash flow, the next stop is a Rescue Package. If you can sell the lease before you get that far.

Landlords Answer:-

22. What happens if I go on to a Rescue Package?

The Landlord may want you to sign over all your F&F to them, to prevent you selling them, to ensure the business can be sold fully equipped, so you own only the contents of the domestic accommodation. They know without a substantial injection of money that you have little chance of financial survival. I did suggest to the MD of one Pub Co that they gave the lessees a months credit to get their cash flow back on track, the answer was an emphatic “No”, they know that they are very likely to get the keys back and whatever is left of the deposit will come to them.

Landlords Answer:-

Rent Reviews

23. Do I need professional Advice on a Rent Review?

You do, it can be a minefield, you also need to put money aside for a Rent Review, with the right person or company, it can be straight forward, but with someone that has limited knowledge of Tied Leases it can be expensive.

Landlords Answer:-

Please note, access to this site is totally free if you would like to subscribe (No Charge) on www.buyingapub.com, they are free to be read for your guidance and aimed to help you get through a time of considerable pressure and demand.

JG&P, Monthly Licensing Update

John Gaunt and Partners

Welcome to our Licensing Update

Please note some of these issues have been posted during the last month

 

A Right Royal Knees Up? Home Office Launch Royal Wedding Consultation 

A four week consultation was launched by the Home Office on plans to allow Licensed Premises to open on the nights of Friday the 18th May and Saturday the 19th May until 1am. The consultation is now closed and it is widely expected that the proposed extensions will be granted.Read more here

PASS Card Update

On the 17th January PASS (Proof of Age Standard Scheme) launched an updated card format which includes the National Police Chief’s Council (NPCC) logo plus the logo of the Security Industry Authority (SIA).Read more here

Merger to Create “Powerful Unified Voice” for the hospitality sector “UKHospitality” 

The Association of Licensed Multiple Retailers (ALMR) and British Hospitality Association (BHA) have revealed their plans to merge and create a new trade body named “UKHospitality”.  The proposed merger is to be voted upon at an EGM of the ALMR on the 21 February 2018.Read more here

Alcohol Minimum Unit Pricing – Select Committee scrutiny 

The Committee heard evidence focused on the potential impact an Alcohol Minimum Unit Pricing (MUP) could have on health, healthcare, the criminal justice system
and any cross border implications posed by decisions of the UK, Scottish and Welsh governments.

A report of the Evidence heard by the committee can be found here. We will await any further analysis or recommendations from them as a result.

MP’s back Agent of Change Bill 

At its first reading on the 10th January 2018, the House of Commons gave approval to the Planning ( Agent of Change) Bill.  The proposed legislation would require property developers to take into account pre-existing businesses, like music venues, before proceeding with a project.Read more here

Consultation On The Future Of London At Night 

The London Night Time Commission consultation has had its deadline for submissions extended until 10 a.m. on Tuesday 20th February.  Meanwhile it has been reported that Philip Kolvin QC has resigned as chair of Chair of the Night Time Commission.Read more here

Food Hygiene Prosecution 

A Birmingham restaurant learned an expensive lesson in relation to food hygiene when it was fined £50,000 by Birmingham Magistrates’ Court.  They had adopted the use of wooden boards as is currently popular in substitution for plates. However, due to repeated use those boards had fallen into a condition whereby they could not be effectively cleaned and indeed the Inspectors stated in evidence that they were incapable of being cleaned.Read more here

The 15th National Pubwatch Conference – Tuesday 27th February 2018 

The 15th National Pubwatch Conference will be held at the Crowne Plaza Hotel, Nottingham on Tuesday 27th February

Read more here

Liverpool Council first to debate benefits of Minimum Unit Pricing of Alcohol? 

A special health summit looking at the effects of Alcohol took place in Liverpool last week.  Liverpool Council were to meet with Public Health officials, the NHS and Alcohol Charities to discuss a plan for Alcohol in the City. One of the main discussion points is minimum unit pricing:Read more here

Short changed on a coffee? 

In case of passing interest…  It is being reported from the USA that a class-action lawsuit accusing Starbucks of under filling lattes has been thrown out by a judge in Oakland, California.  The US district judge found insufficient evidence that Starbucks “cheated” customers by under filling lattes by making its cups too small, using “fill-to” lines on baristas’ pitchers that are too low, and instructing baristas to skimp on ingredients, such as by leaving a quarter-inch of space on top of the drinks.  The judge also said foam counted as part of the drink’s volume (similar in part to the froth on a pint of beer here, as long as within limits).Read more here

Gambling – Betting shops: licensing and planning issues – a briefing document

This House of Commons Library briefing paper looks at licensing and planning issues relating to betting shops in Great Britain.  There are some 8,500 betting shops in Great Britain (Gambling Commission statistics, November 2017).  The briefing document can be found here: ‘Betting shops: licensing and planning issues’

Gambling – Commission launches new consultation on LCCPs 

The Gambling Commission have today launched a new Consultation regarding the LCCPs.  The proposed changes can be found here (which are tracked in the consultation document).  The stated aim of the changes is to make clearer requirements that operators are fair and open with consumers.

The Commission’s proposals are stated to be founded upon evidence of potential harm or unfair treatment of consumers, concerns about lack of compliance with consumer protection legislation, declining public trust in gambling, and concerns about the impact of gambling on children and young or vulnerable people.Read more here

And finally…

Upcoming opportunities

In a new feature, we look ahead to the next few months to highlight some one-off events that may be beneficial to your operation:

  • Winter Olympics – between 9 and 25 February in Pyeongchang, South Korea (GMT +9) followed by the Winter Paralympics from 9 to 18 March.
  • Easter Weekend – Friday 30 March to Monday 2 April.
  • Anthony Joshua’s unification fight against Joseph Parker has now been set for 31 March in Cardiff.
  • Royal Wedding on the 19 May (see above)

On trade beer sales drop underlines need for business rates reform

ALMR 

On trade beer sales drop underlines need for business rates reform

Commenting on the publication of beer sales figures today, ALMR CEO Kate Nicholls said: “The beer sales upturn reflects Government having listened to the united industry that lobbied on beer duty. However, the continued downturn of beer sale in pubs only emphasises the urgent need for Government action to address the other prong of our campaigning – business rates.

“The inequitable skew of the current business rates system favours digital enterprises and punishes pubs. It’s just not compatible with successful high streets and pubs.

“Pubs are facing ever-increasing costs and something has to give. The Government’s manifesto committed to reforming business rates and today’s figures are just the latest proof that swift action is critical.”