Tenancy Agreement FAQs
Below is a list of frequently asked questions regarding tenancy agreements:
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. However, we’re unable to supply details of current pub turnover with regard to food and accommodation, so you’ll need to estimate the turnover you expect to achieve.
Question:
Do I have to buy everything from Greene King Pub Partners?
Answer:
All drinks products are tied in the five year tenancy. 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:
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 does the accountancy package work?
Answer:
All new Licensees sign up to this for the first 12 months. It provides you with first three months’ profit and loss accounts, followed by quarterly accounts, VAT registration and returns, and yearly accounts to submit to the Inland Revenue. It also gives a commentary on your progress, highlighting any concerns and opportunities. This includes four personal visits in the first year. You can also add other facilities such as stocktaking and PAYE.
Question:
What’s the minimum level of finance for a tenancy
Answer:
Around £15-£20k unborrowed for a tenanted business – although a well equipped tenancy with a big inventory (for example, a large, food operation or garden play area) could be anywhere between £35 - £60k.
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. Tenants also pay a security bond of up to £4k.
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 is the Certification of Services?
Answer:
This applies to tenants only and concerns the electric and gas installations, emergency lighting, fire alarms, hot water and heating systems, electric service lifts, manual hoists, platforms and goods lifts and cellar cooling. These items will be serviced and maintained by us for a weekly charge and additional cover can be taken out for extract cleaning, chimney sweeps, sewerage plants and pumping stations. Licensees are responsible for maintaining their own fixtures and fittings.
Question:
What about insurance cover?
Answer:
We have an insurance policy to cover structural elements of the premises and part of this cost is recharged to Licensees. You can also take out a Licensee insurance policy through the Share and Save scheme, which covers other areas for which you are responsible under the terms of the agreement – e.g. fixtures and fittings, employees, public and product liability, glass, money, business interruption and so on.
Question:
How is rent calculated?
Answer:
Both lease and tenancy rents are calculated on the basis of Fair Maintainable Trade, taking into account the current situation and future trends. The tenanted rent is based on a percentage of the Fair Maintainable Turnover, which reflects the full tie and maintenance of 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.
