Pub Co Tied Leases, Family Brewers Tied Tenancies, the difference.
To the Layman or the average pub goer there is no difference, sadly there is, as most people in the industry know.
To the majority of drinkers the cost is often more than in a genuine freehouse, the genuine freehouse gets a very healthy beer discount, which often gets passed on or can get priced below the tied pubs.
Having had a number of genuine freehouses, I did initially sell beer at below the local tied pubs, I quickly learned that it was not a smart move and raised the prices to the average or the upper level in the catchment area.
Trying to remove drunks at closing time who were aggressive and assumed that they owned the pub with historical use and therefore had licence to drink until 3.00 a.m. or they passed out, either was unacceptable to me.
The Pub Co’s owning Tied Leases, many claim to be freehouses, the only similarity they have to a genuine free of tie freehouse is that they sell beers from an assortment of brewers, they keep the larger if not whole discounts and you are tied in most cases to the brewers that they get the largest discounts from.
The actual discounts are never disclosed and are never factored into the divisible profit split, as with gaming machines etc.
With Tied Tenancies, there is in the main very little discount, the brewers are in business to sell their brewed beer.
Pub Co Tied Leases came in when a number of small brewers were bought out.
The major Pub Co’s brought in Commercial Leases which were never created for anything with domestic accommodation, they have always been better suited to vacant shops, factories and other commercial premises.
A Commercial Lease is far more draconian than a Tied Tenancy and normally far longer, in the event of assigning your lease, you are responsible for your assignees debts to the Pub Co should they fail, that covers dilapidations and a host of others debts.
The Tied Lease was originally pedalled as a way to make a substantial capital gain, a few did, some broke even, the rest slunk away having learned a salutary lesson, the leases were in many cases up to twenty years and legally renewable.
The other nasty is that if you sign a Commercial Lease you are bound by the legal implications of the lease until the completion of the term or your assignee has reassigned the lease.
If you want to run a pub, take a Tied Tenancy with a Family Brewer, some have become more hard nosed in their terms, but many do give you serious help and guidance, they do not want failed pubs, they are in business to sell their products, the terms of the tenancy are far more suitable to people wishing to runs pubs without worrying about the long term responsibilities of a Commercial Lease.
You must do your homework in depth and ensure your lawyer explains the responsibilities of both a Tied Lease and a Tied Tenancy, lawyers cop out is to give you a copy of the lease, tell you to study it and ask questions the next time you see him.
Too many people do not want to feel stupid by asking obvious questions, you only get one chance to get the answers and don’t be fobbed off with comments like it’s a standard commercial lease, I got caught years ago to my cost, don’t sign until you know every aspect of your short and long term responsibilities.
If you insist on taking Pub Co Tied (Commercial) Lease, make sure you have a Limited Company with at least six pubs and have some bargaining power, otherwise you could be classed as a Retailer Failure statistic at some stage, unless you are a Retail Genius and have a really switched on Lawyer.
The major Pub Co’s have been subject to a number of Government Inquiries and New Legislation came in a few years ago, don’t deal with any Pub Co that offers a Tied Lease that does not comply with the New Legislation in it’s entirety
Questions that need answering and Links.
Pub Co Tied Lease LINK
Click on this LINK for our thoughts on Answers to the Questions above, so that you may be able ask suitably direct questions and get answers that you understand.
Family Brewer Tied Tenancy LINK
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