Different Ways To Run A Pub – Tenancy, Lease, Or Franchise?

Do you want to run your own pub but are unsure which is the best option for you? Are you confused by the do’s and don’ts of each arrangement?

At Greene King Pub Partners we provide two routes to help you turn your dream of running a pub into a reality. You can apply to be a franchisee or enter into a tenancy agreement with us. As there are advantages and disadvantages to each arrangement, we've provided an overview to help you weigh up the options before making your decision.

Tenancy Overview

Pub tenancies are recognised as a cost-effective route into the pub sector and a preferred entry point for newcomers to the industry.

Under this arrangement, tenants rent the property from the landlord and assume the right to occupy the pub for an agreed period. Tenants are self-employed throughout their agreement, which means it is their duty to hire all staff members and pay their salaries.

Pub tenancies are typically "full ties," which means that tenants are obligated to buy stock such as beer, cider, and other drinks from the landlord. With a "partial tie" arrangement, tenants will still purchase beer and cider through Greene King, but will have more freedom to buy goods from other suppliers.

Franchise overview

A franchise offers the perfect ‘ready to go’ solution and a lower exposure to risk. Franchisees receive a guaranteed income and benefit from a share of the turnover plus bonus and profit share based on their performance.

Franchisees do not pay any rent and will only pay staffing costs, insurances, TV licence and council tax for their own accommodation. They also receive all food and drink products necessary to run their business, including a pre-determined menu to serve to their customers.

We’re all about working closely with you through successful partnerships. That’s why we focus on tenancy and franchise agreements.

However, like some other pub companies we also occasionally offer lease agreements. 

Lease overview

Under a lease arrangement the lessee assumes the right to occupy the pub for a predetermined period and operate it as their own business. The expense of operating the pub, including all repairs, and building upkeep, is entirely the lessee's responsibility, which makes this a more expensive alternative.

The pub will usually be “tied” for the beer and other products and the lessee will have the option to sell on the goodwill of the business. 

Let’s dig deeper and explore some of the most frequently asked questions …

Do I Need To Have Managed A Pub Before?

Franchise: Yes. We look for people with pub management experience who are energised, approachable and keen to create a community led pub experience.

Tenancy: Not necessarily. With a tenancy, experience is preferred, but we really look for transferrable skills such as people management, experience running your own business or a background in hospitality.

Will I Own The Pub?

Franchise: No. There isn’t an option for ownership with our franchise agreement.

Tenancy: No. Tenants rent the premises from us and occupy the pub for an agreed period.

How Long Is A Typical Agreement?

Franchise: The term of our franchise agreement is five years. Franchisees also benefit from an automatic right of renewal for a further five-year period. After the first ten years the Franchisee’s automatic right to renew is removed.

Tenancy: A tenancy usually runs for up to five years, with the option to extend beyond this if both the Tenant and Greene King agree. Tenants do not have an automatic right of renewal with this agreement.

Will I Have The Freedom To Run The Pub How I Want?

Franchise: We set up the business and the franchisee is then responsible for implementing our proven business model.

Tenancy: Tenants have the freedom to implement their own agreed business plan and run the pub their way, with our full backing and support.

What Food And Drink Can I Sell?

Franchise: We provide our franchisees with all the products they need to run their pub, including a food menu curated by our expert chefs.

Tenancy: Our tenants will typically buy their drinks from us, but they can procure their own food.

Am I Responsible For Repairs To The Property?

Franchise: No. Franchisees run the pub on our behalf, and we take on the liability for the property.

Tenancy: Yes. Tenants are responsible for keeping and maintaining the pub in a fair condition, however we take care of any major property repairs, such as the roof or the boiler.

In Summary…

If you’re looking for entrepreneurial freedom, want to make your mark and have the transferrable skills required, a tenancy agreement would be right for you.

If you’re currently a pub manager and are looking to take the next step and run your own pub, then a franchise agreement could offer the perfect ‘ready to go’ solution.

Every partnership begins with you, so finding the best arrangement to suit your needs is essential. Get in touch today. Call us on 01284 843200 or email pubpartnersrecruitment@greeneking.co.uk