What is a franchise pub and how can it work for me?
A pub franchise model in its simplest form is a pub that is owned by a pub management company, such as Greene King, but is operated and managed by an individual.
If you have heard of a managed operator or self-employed manager agreement before, then that’s essentially the same thing as a franchise agreement.
How do pub franchises typically work?
The parent company that owns the franchise model, such as Greene King, is known as the franchisor. They are responsible for providing the building, the menus, the food, the drink, training and support.
The person that buys the rights to operate the pub under the parent company, is called the franchisee. They invest a set amount of money up-front and, in return, are given the keys to a ready-to-trade pub.
What’s meant by a franchise site?
This is a pub that Greene King already own and will have invested time and money into a full refurbishment to bring the pub up to a high standard. Once the renovation has been completed, all the franchise site needs is an experienced pub or hospitality manager to take the reins so it can be opened as a successful business.
What franchise models are available?
While most pub operators offer various franchise models, the two most common are food-focused community pubs and drink-led urban pubs.
At Greene King, for example, we offer both franchise models so you can pick the one that suits you and your career aspirations best:
- Hive – 70/30 food and drink split
- Nest – 95% drink-led
What are the key features of a pub franchise agreement?
All pub franchise agreements differ but at Greene King Pub Partners, our agreements have the following features:
- Term: 5 years
- Tie Info: Greene King supplies all products
- Premium: You will not be required to pay a premium
- Deposit: An ingoing charge of either £3,000 or £5,000 is required, depending on the franchise model you will operate. This includes legal fees, induction and training.
- Repairs & Maintenance: Greene King is responsible for all repairs and maintenance on the property
- Rent Reviews: There are no rent reviews as rent is not charged.
Earnings: Depending on the franchise model you operate, a minimum guaranteed income may be provided. With Greene King, every pub franchisee earns a percentage of the Net Weekly Turnover of their pub (variable by pub), quarterly business profits (variable by pub and performance) and annual bonuses for achievements, such as a meeting compliance audits and achieving fantastic customer feedback.
Insurance: Buildings insurance is provided by Greene King but you would be required to take out and maintain your own insurance policies which must include both employers liability and public liability insurance. Greene King would also recommend that you take out and maintain appropriate business interruption insurance.
How do the franchise models work?
A pub franchise is designed to supply you with everything you need to run a pub – including all of the fixtures and fittings, furniture and stock – so you can focus on running a great pub operation and providing customers with an exceptional pub experience.
The pub operating company will pay for the business rates, utility bills, services, licenses and repairs to the pub you run, so you don’t have to worry about these aspects.
You will also be supplied with all of the food and drink you serve in your pub. Where applicable, you’ll serve an agreed food menu where all dish ingredients, crockery, menus and promotions are provided.
With Greene King, another way for you to profit as a franchisee is through a share of the turnover from your pub, and this is paid on a weekly basis, along with a share of profits on a quarterly basis. Some franchise models pay a guaranteed franchise fee to support you with the costs of staffing and an annual bonus scheme too.
What’s the benefit of a franchise model?
A primary benefit of a franchise agreement is that it gives people the opportunity to take the next step in their career (from general manager to pub landlord, for example) with a low-cost, low-risk investment – within the Greene King model, it’s £5,000 for Hive and £3,000 for Nest.
This gives you the opportunity to run your own business, but with the support of an established pub company behind you. As a franchisee, you will operate the pub and will directly employ your own team to support you with its operation. But working alongside you, at Greene King we would supply you with a framework for how to run your business, so you will have all the tools you need to be successful, as you deliver our proven franchise concepts.
And not forgetting, you will be handed the keys to a ready-to-trade pub that’s been extensively refurbished and designed to provide a fantastic customer experience. You couldn’t be starting your pub landlord journey off on a better foot!
If you’re interested in finding out more about Greene King franchise models, please visit www.greenekingpubs.co.uk/franchise , give us a call on 01284 843200 or use our Live Chat functionality to discuss further.