Punch boss wants "quick and decisive" BEC review

Punch Taverns owns 7,560 pubs across the country. The vast majority of licensees running those pubs are 'tied' to the pubco. Here leased division managing director Deborah Kemp puts forward her thoughts on the tie.

What are the benefits of being tied?

Well, how long have you got? In a tied agreement Punch Taverns has a vested interest in helping licensees and growing sales and this encourages us to offer a high level of support, which we put in four areas.

• Support and training which helps improve licensees' skills and capabilities.

• Marketing support to help them compete in their marketplace.

• Specialist help - such as the £40m invested to help licensees cope with the smoking ban.

• Financial help and support - we go through their business and give them help where it is most appropriate, for example this could be in the form of marketing support or rent concessions.

In The Publican's Market Report 72 per cent of tenants said they would prefer to go free-of-tie and pay more rent - does that figure surprise you?

It doesn't surprise me because it is one of those questions that most people would answer yes to but without any appreciation or understanding of what the trade-off is. It's a bit like asking someone if they would like to work less hours.

I think sometimes it feels inequitable because when a new licensee goes into a pub sometimes it has been run down and our approach is to grant a rent and reflect that but that doesn't mean the business doesn't have potential and we take that into account at the rent review. They go in with a lower rent and then further down the line think they are being penalised. One of Fair Pint's criticisms is that the recommendations of the 2004 TISC inquiry have not been met. How do you respond to that?

We don't know which ones they are referring to because all of their arguments seem centred on the tie and that wasn't raised as a concern at the original inquiry.

So I am not sure which recommendations Fair Pint thinks have not been met. As the tie wasn't raised as being a concern, from my perspective it isn't up for review.

Are you concerned about the Fair Pint campaign?

They do seem to have a single agenda on the tie and there isn't any real evidence that suggests there is more than a handful of individual members.

We have asked if there are members who are Punch licensees but have not heard of any. We would recommend that they contact us because our experience is that issues get resolved much more quickly and effectively if you deal with them on an individual basis rather than dealing with a pressure group.

What do you think the outcome of the BEC review will be?

I'd never presume to predict the outcome but from our perspective we are taking it seriously and we will put in a robust submission.

We also hope the review will be quick and decisive so we can get on with what we should be doing, which is supporting our customers and addressing their concerns.

We hear from a lot of licensees who complain about the tie: are things fully explained before they sign up?

This is something we have addressed since the 2004 TISC review. We do a check list and make sure they have a business plan.

Our agreement is now in plain English and in the front we put in a simple summary. But there are still licensees who don't take legal advice or get a survey done.

We can't legislate for naivety and poor judgment. It is part of the check list that those taking a long-term agreement sign a letter saying they have taken legal advice.

If the tie deal was abolished what would that mean for your business?

It would be much simpler because we wouldn't need all of the sales teams we have! We would revert to the (free-of-tie) Wellington type of model of being more of a property business but I think it is unlikely to happen.

If tenants were offered a free-of-tie how much would their rent go up?

It is difficult to generalise and it depends if you are talking about an individual pub or the whole market. Rent would go up but we would have to look at every single pub.

The other fundamental thing about the TISC report is that they didn't feel licensees would be better off free-of-tie because they believed the brewers would change their pricing structure. Would you run a tied pub?

The first question is would I run a pub? And yes, I would. I would also run a tied pub because I don't see there is any difference, as long as you have done your homework, you understand the agreement and go into it prepared.