Even more people are reading the articles about avoiding Pub Co Tied Leases or TAW’s at this moment of time. (Barrel-dregs)
The fault lies with the Pub Co’s, they are trying to find legal ways not to comply with the New Legislation.
The New Legislation was brought in to try and make the industry fairer for people taking Tied Leases with the MRO, Market Rent Option.
I ran a small Pub Co and offered the equivalent of the MRO to my lessees.
The system was very simple, as a multiple operator I received a substantially greater discount from brewers and suppliers than a single operator could ever achieve.
At that time, the best discount that single operator could achieve was £70 per brewers barrel (36 Gals), my discount was substantially higher, I could afford to give my lessees a further £20 per barrel, if they dealt with the brewers and suppliers that gave me a multiple operators discount.
They paid the brewers direct and achieved a months credit, I received the additional discount one month in arrears, after the lessees had paid their bills.
I didn’t need a massive accounting system and a load of miss named BDM’s, Area Managers etc., who in the main are debt collectors for struggling lessees.
The system worked, I had no worries about collecting money, the rent was paid monthly, the lessees discount and cash flow was better than a Tied Tenancy and everyone was happy.
My main job and the few staff that I had, jobs were to screw the best deal out of suppliers and help lessees boost their sales with good business practice.
If a lessee had a problem, find a way to sort it out as fast as possible, the more business that they did, the greater our income.
I removed the guarantee agreement (AGA) from all contracts, because we always had people wanting our pubs and commercial property.
The Guarantee Agreement is a nasty con to squeeze more money out of a departing lessee, since certain Pub Co’s let you buy your way out of the AGA, for a reasonably large sum, they wouldn’t let you buy your way out if they thought that the pub was unlettable or the new lessee was a serious risk.
On Insurance, we insisted that the Insurers notified us if the premium was not paid and gave us fourteen days to pay the insurance, which we didn’t have to do, the insurances were always up to date.
I did try to suggest that this was a better way to run a Pub Co to one major company, the beer discount is over £250 a barrel and very little is passed on and the failure rate still persists, the market is shrinking for traditional pubs.
The short term leases being offered to avoid complying with the new legislation, have little or no security within the 54 Act.
There are far better ways to run Pub Co’s, our suggestion is keep well clear and take a Tied Tenancy with a decent Family Brewer, the less people that take Tied Pub Co Leases the sooner the new Legislation is complied with, but on the other hand it could take years.
Always remember buying a pub is like marriage, “Marry in haste and repent at Leisure”.
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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.
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