Open books: open mind

For once, The interests of pubco and licensee may be completely coterminous here.

Many licensees will be cynical about the trend among pubcos to require tenants to provide access to their books. Greene King, Charles Wells and Everards already operate the policy. Punch is now considering it.

For some proud licensees it will feel like their Big Brother pubco has found another way of controlling them. Many will suspect that the information harvested by the pubcos might well be used to set keener rents at some stage in the future. It also means that licensees can't be sure if their pubco-approved accountant is really working for them.

There may be long-term strategic reasons why the pubcos are pushing in this direction. Food is becoming increasingly critical to trading success. Yet here, unfortunately for the pubcos, licensees' success or otherwise is pretty much invisible to them. Access to much more trading information is vital if pubcos are to set appropriate rents as beer sales continue to decline.

A deep ambivalence is indeed the understandable first reaction to mandatory open-book accounts. But the experience of Greene King and its tenants needs to be considered. The company recruits 250 new tenants each year. The open-book policy, which is part of a wider support package that includes a rent fixed for five years, has reduced failure rates dramatically. Dozens and dozens of licensees new to the trade at Greene King have survived thanks to the mandatory management accounts system.

Tenant forums at Greene King are describing the policy as the best piece of support ever introduced by the company. Four out of five probationary-year tenants are choosing to remain with the Greene King-nominated accountant after their first compulsory year. Greene King is also applying a degree of flexibility and is not insisting experienced licensees who join it provide management accounts.

All in all, it is hard to argue against the considerable merits of open-book accounts. More support for licensees in their early months of business has to be an area of focus for pubcos if another visit to the industry by the Trade and Industry Select Committee is to be avoided. For once, the interests of the pubco and licensee may be completely coterminous here.