Lease Agreement FAQs
Below is a list of frequently asked questions regarding lease agreements:
Question:
Is there a volume discount scheme?
Answer:
Yes on draught beer – it offers Licensees the chance to earn £75 for every barrel achieved over target – up to 10% - and £100 per barrel thereafter. Both tenants and lessees qualify from day one. Discounts are paid once a year.
Question:
What about a discount for other goods and services?
Answer:
Our Share and Save scheme offers discounts on a wide range of goods and services, as well as a comprehensive package of promotions and dealer loaders for all agreements.
Question:
How is rent calculated?
Answer:
Lease and tenancy rents are calculated on the basis of Fair Maintainable Trade, taking into account the current situation and future trends. The lease rent is based on a higher percentage, since it takes into account the beer-only tie, the repair liability and the ability to assign the business. However we so no sense in charging very high rents that leave no profit for the tenant, so all suggested rent levels are based on a typical licensee being able to develop the business.
Question:
Do I have to buy everything from Greene King Pub Partners?
Answer:
Leases are tied for beers, ciders, flavoured, non and low alcohol drinks, but all other products are free of tie. We offer an exceptional delivery and support service and aim for competitive wholesale pricing on our packaged beers, wines, spirits and minerals.
Question:
What’s the difference between a tenancy and a lease?
Answer:
Tenants buy the fixtures and fittings, have a limited repair and redecoration liability, pay a lower rent in return for a full tie on beer, wines, spirits and minerals and can’t assign the goodwill of the business on surrender. The lessee pays a premium (to include the fixtures and fittings and goodwill), and pays a higher rent than the tenant, as well as taking on full repair and redecoration liability. However, they are free of tie for wines, spirits and minerals and are free to sell on the goodwill after a defined period.
Question:
What background information will I receive?
Answer:
We’ll make sure you have all the relevant information, including some historical volume figures, plus the rent required for the pub. With regard to assignable leases, the turnover figures and other information about the business are supplied by the current lessees – you’ll need to verify these before proceeding.
Question:
What’s the minimum level of finance for a lease?
Answer:
The ingoing costs for a new lease will be £50 – 150k, depending on the terms of the lease. This doesn’t allow for working capital, which has to be added to this figure.
Question:
What do I pay for?
Answer:
Fixtures, fittings, stock, glassware, crockery, cutlery, fuel and cleaning materials, legal, brokers and stocktaking fees, plus rent in advance. Lessees pay a security bond equivalent to three months of the annual rent. There may also be a stamp duty liability and other related fees.
