Different Pub Agreements
Looking to run your own pub? In the UK, there are several ways ways in which you can do it. It’s important to decide which one will suit you best. When considering the best option for you, make sure you obtain independent professional advice.
A tenancy is usually a short occupational agreement where you rent the property from a brewery or pub company for 3 to 5 years. It provides a lower cost of entry than you’d find on a lease or franchise business. You’ll be self-employed and you’ll employ everyone in the business. You’ll have shared responsibility for the repairs and maintenance of the property. You’ll be unable to sell-on any goodwill in the business.
A franchise agreement enables you to operate a pub on behalf of the pub company. There are different variations, however you will usually have standard operating procedures reflecting the business model, and you earn either a share of turnover, or a profit share, sometimes both. Property repairs and maintenance responsibility can vary so can the length of term. In most cases you have the ability to sell-on the business.
The below video explains the differences between a tenancy or franchise with Greene King, which are the two main agreements types we offer, however other agreements types are available.
Lease agreements are longer-term occupational agreements, where you rent the property from a brewery or pub company. The length of term can typically be anything from 10 to 30 years. You’ll be self-employed and employ everyone in the business. You’ll have full responsibility for the upkeep of the property, therefore you’ll need to budget for higher overhead costs. You’re able to sell-on the goodwill of the business.
A management contract is similar to a franchise agreement. With this type of agreement you operate the pub on behalf of the pub company. It’s usual for the pub company to hold the property repairs and maintenance liability, as well as pay all running costs and own the stock. You’ll be paid a management fee, so you’ll have a guaranteed income, and additional bonuses may be earned depending on the business performance and standards audits of the pub.
You’re employed by the brewery or the pub company who owns the property, and you’d be paid a salary. The brewery or pub company employs everyone working in the pub and has full responsibility for the management and upkeep of the property.
You own the pub property yourself. You’re self-employed and you employ everyone in the business. You have full responsibility for the upkeep of the property.