Buying a Pub or Restaurant, FAQ’s
These FAQs cover a large area of specialised, technical areas of Buying a Business. As no two situations are the same, only the basic position is outlined. The answers do not provide a complete or authoritative statement of the law, nor do they constitute legal advice by the author. The information provided is only a snapshot: it does not create a contractual relationship nor does it form part of any other advice, whether paid or free.
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A Basic number of questions for people thinking about buying a Pub or Restaurant.
Q. Where can I get information about the things I need to know to buy and run a pub or restaurant, without spending a fortune?
A. Go to www.smashwords.com and look up “The Common Sense Guide to Buying a Pub” and the “Common Sense Guide to Buying a Restaurant”, they come in ebook form and cost $5.99, UK equivalent £3.78, they are both aimed at the UK Leisure Industry, but a lot of the information is common business sense, you can also read part of them free, before buying.
Q. Which Qualifications do I need?
A. The NCPLH has been renamed and the new name will be: Level 2 Award for Personal Licence Holders. You will start to see this title being used from August 2010 onwards, along with the abbreviation APLH rather than NCPLH. The APLH will continue to be delivered as a one-day course with a 40 question multiple-choice exam at the end of it. – See more at: http://www.cpltraining.co.uk/blog/post/The-National-Certificate-for-Personal-Licence-Holders-will-be-renamed!.aspx#sthash.MGZPo6rI.dpuf. This sadly is all that is required to hold a licence, provided that you do not have a criminal conviction.
Q. Do I need anything else?
A. Yes, you need to do the EHO, (Environmental Health Organisation) Food and Hygeine course, everyone involved with handling food should also do this course, this can be done at most secondary colleges that run catering courses, shop around the prices can vary substantially. You also need to ensure that you are registered with the EHO in the area where your business is.
Q. I have a minor conviction, will this affect my application?
A. Yes, you need to check with Police Licensing Officer and your Local Authority Licensing Officer before you invest any further, they will check Criminal Records.
Q. Where can I apply for a Licence (APLH)?
A. You must apply to the Local Authority where you live, unfortunately if you are buying abusiness elsewhere you will have to register a change of address when you buy your business and the cost is almost as much as the original licence, if you do not register a change fairly quickly, they can stop you trading until the change has been registered.
Q. Where can I do the ALPH?
A. CPL Training Ltd. have training facilities all over the country and can normally accommodate courses at short notice. You can also do the APLH at most catering Colleges, though they tend to wait until they have sufficient numbers, the BII (British Institute of Innkeeping) likewise.
Q. Will it help if I do some further qualifications?
A. It will, but you need to do them before you buy a business, when you buy a business you will find you are too busy to do any other courses, other than single day courses, you cannot afford the time for a weeks course.
Q. Do BII Post Nominals (MBII, FBII, CBII etc,) and qualifications count?
A. Sadly very little, they should, but because the industry only requires a one day course to hold a licence, the majority of companies, pay little respect to them, if industry standards required levels of professionalism to be recognised, we may not have the failure rate that exists in the industry. Identifying the right course for your business is vital and you need guidance, don’t do courses for courses sake, do the ones that broaden your knowledge in relation to your proposed business.
Q. Can I use a Property Conveyancer to buy my new business?
A. You can, but I would advise against it, use a Commercial Lawyer, buying licensed property can be a mine field and buying a lease more so, taking a tenancy also. The trading conditions imposed by the Landlord or the Brewer can be draconian and you need an experienced lawyer who deals in commercial licensed leases and tenancies.
Q. Why do I need a Full Survey?
A. Catering and Licensed premises are invariably old properties that have had years of use and only cosmetic repairs, consequently many require a substantial amount of remedial work, most not visible. With Freeholds it is down to you, but with leases the Landlord can put a massive dilapidations bill on you, generated by years of neglect with your predecessors. Unless you have an agreed independent survey when you took possession, the landlord knows that you have not agreed a survey with him and many will take advantage of it, if you are assigning the lease.
Q. Where should I go to find Businesses for sale?
A. For pubs, there are many Commercial Agents that advertise in the Morning Advertiser, the Caterer and Hotelkeeper for restaurants and hotels and the Internet, if you are still struggling email us at firstname.lastname@example.org and we will give you some details of Commercial/Business agents.
Q. What is a Freehouse?
A. A Freehouse is normally a freehold pub with no trading ties to a brewer, you can deal with any brewer and get excellent discounts. There are leased Freehouses and a number of Pub.Co’s call their pubs Freehouses, they so supply an array of different products, but you are totally tied in most cases on beers, wines soft drinks and anything else that they can tie up in the lease, with minimal discount.
Q. What is a Tied Lease.
A. A lease is for a specific period e.g. 5, 10, 15, 20 years, you normally cannot sell your lease within two years, without incurring serious penalties, a lease needs serious legal advice along with the Tied conditions. You are also normally responsible for all the repairs, a survey is vital and must be agreed formally with the Landlord (Buyer Beware).
Q. What is a Tenancy?
A. Tenancies are short term leases from Brewers, normally 1-3 years, you sell all their products at minimal discount and have no structural responsibility for the building, normally painting and decorating, but you need to check the Tenancy Agreement.
Q. Do I need to register for VAT?
A. Normally yes, if your turnover is going to exceed the VAT minimum, check the VAT web site. Some small catering establishments aim to keep their turnover below the minimum for ease of paperwork.
Q. Do I need to register with the Inland Revenue?
A. Yes, your Accountant will register your business, but if you have any staff, part time or full time, they have to be registered and declared, do not pay any staff in cash and not recorded for Inland Revenue purposes. Ensure all staff sign the relevant Inland Revenue Forms,
Q. Do I need an Accountant, I have always done my own accountants?
A. Unless you have an intimate knowledge of Tax accounting, both Inland Revenue and VAT, always use an accountant. Your time is too short to spend doing reams of paperwork, you have to record everything, purchases, sales etc., which takes enough of your valuable time.
Q. Do I need a Stocktaker?
A. Yes, for Changeover Day a Stocktaker is essential, unless you have in depth experience on stock control, valuation and profitability regular checks by a Stocktaker are also essential. If you have several staff, they can be invaluable if you are suffering stock shortages and you need up to date information and there is nothing like an experienced eye. Very small businesses do not necessarily need regular stocktakes, but medium to large trading operations will benefit from good stocktaking control. Brulines and Vianet will not give you this level of information.
Q. How can I check all the things that I need to put in place before I take the business over.
A. Have a look at “Changeover Day Check List” on this site www.buyingapub.com, we have tried to cover almost every eventuality that you might need, it will certainly be a useful guide, we have tried to cover all the things that you need to put in place or be aware of before and on Changeover Day.
These FAQ’s are for your guidance, more complex or specific issues, you may or will need to consult a specialist.
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