Fair Maintainable Trade (FMT), Comparables, Reasonably Efficient Operator (REO), Competent Operator.

By | March 24, 2019

 

Fair Maintainable Trade (FMT), Comparables, Reasonably Efficient Operator (REO), Competent Operator.

FMT (Fair Maintainable Trade) and REO  (Reasonably Efficient Operator) as still used by some though undefined, Competent Operator.

FMT that obscenely used title for making wildly speculative estimations of a businesses future business, to ensure that the rental levels confirm the freehold investment values to satisfy bank borrowings or backers, disregarding viability. LINK

REO another totally misinterpreted title, the quote in the dictionary explanation or Reasonably Efficient as a moderate operator, not a Retail Genius or 3 star Michelin Chef, which the majority of pub owning companies seem to demand these days as an REO, if they fail to meet this criteria they are listed as a Retailer Failure and their careers in the industry have a very limited span. LINK

Sadly these honest, decent people in the main, walk into these Tied Pub Co Leased or Tenants at Will (TAW) jungle, listen to the training schedule and believe that they Masters of the Pub Universe when they take over.

You’re not, you’re entering a minefield of totally legal activities, by companies who get called brewers, they don’t brew beer they are very large property companies, most of them, they are legally avoiding the New Legislation which was brought in to stop their activities and has failed miserably in many peoples eyes.

The Pub Co Adjudicator (PCA) is supposed to enforce and arbitrate the New Legislation, but the devious thinking by the Pub Co’s high priced lawyers appear to run rings round the PCA and the hapless Tenants/Lessees do not get the benefit of the New Legislation.

So nothing changes, the only thing that we can say is do not have anything to do with these companies until they comply totally with the Legislation.

It didn’t used to be like this, the old brewers knew exactly what their market share in an area was, if one pubs business went down another would go up, their FMT’s  collectively throughout their estate would possibly estimate 6-7% increase in brewed products.

Comparables, another miss used term, when applied to a specific catchment area with years of detailed records, it was relevant.

Being applied across the country, with no accurate analysis, the assumption that all pubs are the same within a ten or twenty mile radius, is wholly inaccurate, yet these valuers still use  it. LINK

Now some of my old friends breweries have been taken over by hard nosed money men, where people count for nothing, FMT’s are guessed at doubling the capacity of the brewery, a physical impossibility.

The sad thing is all these terms worked in a designated area, where there had been years of detailed supply/sales records to all the Pubs supplied by individual Brewers.

With the regrettable creation of the present major Pub Co’s, who are supposed to be controlled by the New Legislation, which they have legally avoided complying  with, the old terms have been hijacked and miss used to their financial advantage.

These terms cannot be used outside specific catchment areas with any accuracy without many years of accurate analysis, every catchment area is totally different.

You cannot compare a busy town centre with an urban or rural area, the variation in the sales and the nature of the business vary enormously.

Worth Reading LINK

If you would like a link to Leisure Industry news, please click on the following Link  http://www.langtoncapital.co.uk/ gives current day’s news from 8am.

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.

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.

copyright (©)2015, www.buyingapub.com

 

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.