Pub Franchise FAQ's
If you are interested in running a pub business, there are essentially three routes into entering the licensed trade:
back to topMANAGEMENT
What is involved in Pub Management?
If you decide you wish to Manage a Public House, you will be employed by a Pub Company or Brewery that owns the business and probably the freehold of the premises.
What responsibilities does the Manager have?
The Manager will normally be responsible for the day to day running of the pub, including recruiting staff, stock, operations, and ultimately achieving profit targets.
Different companies will devolve various responsibilities, though Operating Systems are usually firmly implanted especially in pub chains e.g. Chef and Brewer.
Is there a career in Pub Management?
Yes. Newcomers to the industry would usually enter as a trainee manager and, on demonstrating the required skills and potential, would develop into becoming the Manager of the business, and sometimes of more than one business.
What support will I get from the Pub Company / Owner of the Business?
This will depend upon the operating company, but you should receive support commensurate to a professional company. This would include training, marketing support, business information and head office back up on employment law and all relevant legislation (see Training Section).
What options are open to me after Pub Management?
If you decide to remain in the hospitality business, you will, as a successful Manager, be in a strong position to take a pub tenancy or lease, or if suitably well funded, to purchase a freehold pub (see other sections). This means that you would be self-employed, running your own business and extracting the profit, rather than working for a company.
LEASEHOLD / TENANCY
If you are considering taking on a tenancy or lease agreement, you should be aware that every pub operating company will have different criteria and contracts. The following frequently asked questions are intended to provide a general guide, but you should always check the detail with any individual pub company you are interested in working with.
What is a Tenancy or Lease?
Tenancies and Leases are commercial arrangements whereby a Pub Business, including the building and land, is let to an individual, partnership or limited company.
The terms of the letting are incorporated into an agreement which includes trading arrangements, property repair responsibilities and other legal requirements for both parties. These arrangements provide the Tenant/Lessee with freedom to run their own business, with the support of an experienced pub operator.
What is the length of a tenancy or lease agreement?
Companies usually provide a range of agreements, from short term tenancies to longer-term leases. Most tenancies are for a fixed period and contracted in to the Landlord and Tenant Act, providing a good balance between security and flexibility. Another advantage of a tenancy agreement is the relatively low capital investment required. Leases may be of any agreed duration, although usually for a minimum of 10 years and are likely to suit the more experienced retailer looking to assign the lease after a period of trading.
What are the implications of a tie?
Some operators will impose a tie on pubs within their estate and the level of any tie is likely to be reflected in the rent charged. The tie is an agreement with a supplier, or multiple suppliers, to provide stock to the outlet, with purchases in any specified category being made exclusively through that supplier. It may be a full tie (all drinks products) or a partial tie (all beer products or all wines).
How is the rent calculated?
The rent is normally calculated by creating a realistic Profit and Loss Account and reflects Open Market rent. Each house will have individual calculations, depending on turnover and overheads and will be fully discussed prior to taking over the business.
What training will I need before taking a pub franchise?
This will depend on your experience, but the minimum qualification required for obtaining a Licence is the NCPLH. Any further training requirements will be agreed before you take your pub. (see section on Training)
What are the Licensee's responsibilities concerning repairs?
You can expect to be issued with a schedule of repair responsibilities when you receive your Heads of Terms offer letter. The level of repair responsibility is likely to reflect the length of your agreement, with licensee liability increasing for longer leases. The individual details should be discussed before you make any commitment.
Who is responsible for the decoration?
Responsibility for decoration differs by agreement type and should be clarified before entering into any agreement.
Can I decorate the interior of the pub, even if it is not due?
You should refer to individual pub company's operating agreements.
What are the arrangements for fruit machines etc?
Most companies will share the income from Amusement with Prizes (AWPs), Skill with Prizes (SWPs) and Pool Tables with its retailers but individual arrangements may differ.
What happens to the staff when I take over the franchise?
When you take over a tenancy, the staff who are employed in the business transfer, and are entitled to work for you under the same terms and conditions as the previous employer, under the Transfer of Undertaking (Protection of Employment) Regulations 2006 (TUPE). The outgoing tenant should provide you with all details, including rates of pay, hours worked etc.
What support can I expect from a pub operator?
Pub Operators provide a range of support to help you develop a successful business, particularly in your first year of trading. This might include accountancy advice, marketing, licensing, health and safety, training and technical services.
How much will I have to invest to acquire a tenanted or leased pub?
Each pub varies, with the capital required estimated to enable you to take the tenancy and run your own business. It might include:
- Trade Fixtures and Fittings
- Security Bond
- Stock and Glassware
- Administration fee
- One months rent in advance
- Valuation fee
- Working Capital
- Training as required
- Others as identified
Do I get my money back when I leave?
You will get money back for the Fixtures and Fittings (as valued on leaving) as well as the Security Bond and Stock and Glassware. If there are any debts outstanding with the Company, for your Trade Account, for example, this will be deducted from your entitlement.
Who values the fixture and fittings?
You will need to employ an Independent Valuer who will do this on your behalf. Contact details can be provided by your pub operator or you may wish to source your own valuer.
Who will I see from the Pub Company?
Your main contact will be your Business Development Manager/Business Relationship Manager who will call to discuss business issues with you on a regular basis. You may also have regular contact with the customer support and sales ordering teams. Depending on the service supply agreements you will also see your weekly dray crew, technical services and other support departments.
Do Pub Companies offer loans?
Loans are very often available, subject to certain conditions. If you require further information, please contact individual companies.
FREEHOUSE
What is involved in taking a Freehouse?
Buying a Freehouse means that you would purchase the freehold of a pub and run your own business from that premises. You will be free to source all products from whichever suppliers you choose.
Do I need any experience to take on a Free House?
It would be unwise to purchase a free house without having a very clear Business Plan. Experience in running either a Managed House or a Leasehold outlet would be an advantage, but if you have no experience, the recruitment of a high quality management team will be essential.
Where do I find out what pub businesses are for sale?
Some freehouses are sold by Private Treaty and do not appear on the Open Market. To purchase one of these you will need to know the vendor, but most pubs are advertised by Agents, either in the Trade Press (such as the Publican and Morning Advertiser) or in other run publications.
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