Enterprise's £150-a-barrel discount

By The PMA Team

- Last updated on GMT

Related tags: Licensees, Lease, Leasehold estate, Enterprise

The new lease offers 'a complete business package'
The new lease offers 'a complete business package'
Enterprise Inns is offering a new lease agreement that means licensees earn a £150-a-barrel discount if they exceed barrelage targets. It's part of...

Enterprise Inns is offering a new lease agreement that means licensees earn a £150-a-barrel discount if they exceed barrelage targets.

It's part of a suite of new agreements offering licensees more flexibility and support.

Enterprise's new Retail Partnership Tenancy (RPT) offers licensees shorter lease terms — anywhere between one year and five years — with the option of giving six months' notice. The shorter leases on offer come with a much more "interventionist" approach from Enterprise to maximise survival chances.

For the first time, Enterprise has introduced compulsory open-book accounting and stock-taking to ensure tenants "form good habits from the start" — this costs around £3,000 per annum. The tenanted operator has a bank of eight approved stock-takers and accountants that licensees can use.

The company has also insisted on a "repairing fund" so, in the case of shorter tenancies for example, £1,500 is set aside per annum for repairs, rising to an average of £6,500 for longer leases. Enterprise has also instituted a mandatory compliance package.

The new approach from Enterprise sees the company offering licensees a range of enhanced services. It is offering access to its own network of contractors for repair work, and also Experian data to ensure licensees drawing up a business plan understand whether neighbourhood demographics are suitable for their trading plan.

Chief operating officer Simon Townsend said: "We are trying to provide licensees with a complete business package and offer the appropriate deal for the appropriate pub. We want to ensure that when people invest in a tenanted pub, the safest place is with Enterprise."

Gerry Carroll, Enterprise managing director of operations, who has overseen the development of the new agreements, said the idea was to ensure a "win/win situation" where licensees were given the greatest chance to establish themselves for the long term. Licensees who sign up for shorter tenancies are able to upgrade to longer leases.

Since their launch in November, RPTs have made up around 50% of new lettings. Enterprise believes this will settle at around 20% in the long term.

MA opinion

Enterprise bosses admit they have learned from the marketplace in introducing items like open-book accounting and compulsory stock-taking.

Other tenanted pubcos like Greene King have found that licensees stand a much greater chance of survival if basic business disciplines are enforced at the start.

New Enterprise licensees are being offered more flexibility — and the fall-back of the option to leave with six months' notice.

For those selling more beer than their barrelage target, there's the big carrot of £150 of discount for extra barrelage.

All in all, it's a sensible and welcome evolution of contractual flexibility and tenant support structures.

Related topics: Legislation, Ei Group

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