Punch to ditch restrictive covenants

By Hamish Champ

- Last updated on GMT

Related tags Restrictive covenants Contract law Lease Renting

Punch Taverns will attend this weeks ALMR 'mediation' meeting armed with a range of proposed amendments to its lease agreements, including removing...

Punch Taverns will attend this weeks ALMR 'mediation' meeting armed with a range of proposed amendments to its lease agreements, including removing the rentalisation aspect of machine income and ditching restrictive covenants from pub sales.

Speaking to The Publican,​ Roger Whiteside, head of Punch's leased operation said the pubco was committed to "evolving and improving the working aspects" of the tied pub model.

The BEC report had highlighted issues with the model with which he had some sympathy, Whiteside said, although he had planned to bring about greater transparency anyway.

Outlining the changes he wished to bring into Punch's lease agreements, Whiteside said the group needed to be clearer about the machine tie and illustrate that lessees were better off working with its machine estate.

However he acknowledged that machine income should not be included in any rent assessment and that this practice would stop.

Whiteside also said if a lessee could find a cheaper insurance quote for their pub the pubco would refund them the difference.

Punch would also cease to place restrictive covenants in any pub sale they undertook, with the market effectively deciding whether a pub sold should be a pub in the future, while the group fully backed the BII's independent appeals panel proposals.

Whiteside said he didn't mind whether people believed the group had been forced into making these changes as a result of the BEC report, "only that these changes are made".

The alterations to current and future agreements would "take a while", he added, in what would effectively be a two-stage process.

"We're looking for a shift in how we do business with our licensees in order to fulfil our commitment to being open, transparent and honest with them.

"We can't subsidise every business that gets into trouble but had our agreements been more transparent in the past then perhaps some of the issues we've seen would not have arisen," he said.

Whiteside said Punch had no plans to go 'free-of-tie', but that the 300 or so lessees who were in the process of buying their pub from the group would be able to buy their beer from whosoever they chose, once they had completed their respective purchases.

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