A couple of years ago a Pub Co who shall remain anonymous put a family into one of their pubs under a Tenant at Will Agreement (TAW), they were delighted, the terms were very favourable and they were making a success of it.
The children were delighted with their new school and doing well, as soon as the BDM heard this he insisted that they sign a lease at a grossly inflated rent and the rest would have been history, not quite, the Pub Co were threatened with exposure and backed down.
How many others have been caught on this same scam with children, I know from my own experiences, that having the children in decent schools is paramount whilst you are running a pub or any business for that matter, to exploit this is criminal, forcing people to accept an unworkable lease because of family pressures.
The variation on this is putting someone in on a TAW with a low rent to stop a pub closing or to encourage a lessee to occupy a pub and develop a commitment.
I have too many people who have done this, liked the pub, invested money in the premises to make it work only to find that they are threatened with eviction once they are committed unless they sign a lease at an inflated or unsustainable rent, invariably they do not have a survey, the legal side is neglected because they are occupying the premises, the result is a financial disaster.
Please, Please, Please if you become a TAW ensure that you at least have a written commitment as to what the rent will be and ensure that it is viable.
My latest heart rending story is a very honest lady took a TAW, had all sorts of hassle from the last evicted lessee, she managed to invest all her available money in putting the pub right, thought she was trading well and building up business, when the BDM insisted that she sign a lease or be evicted, Mr Nice Guy turned into Mr Nasty as soon as he thought she was committed.
The rent was more than 25% of the turnover, she thought she would lose all her investment if evicted and signed the lease, the BDM then said in a casual throw away statement which she has recorded “This Pub has never ever made money.”
Because she has no hope of making a profit, she is now in debt and the caring Pub Co have served her with an eviction order, all this within a year and her husband has left her.
She has cleaned the pub up into a viable concern and the Pub Co will let it again, to some unfortunate.
The Landlord insists that they sign over all the Fixtures and Fittings to the Landlord as soon as they struggle to pay the rent, this means that they can resell the business as a going concern at a substantial profit.
These activities cannot be given press coverage at the time only afterwards, we have to stop it.
We are thinking of putting a book on this site with all the devious practices by Pub Co’s to extract money by any technically legal way to warn newcomers.
Sadly since writing this article, there are other companies, who use the same tactics, outside the licensed industry.
The actions by most of the unscrupulous companies are technically only just legal at the greatest stretch of the imagination, since they have the top Legal Advice, but morally unacceptable.
The glib answer is “Buyer Beware” when you meet the landlords manager.
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