McMullen's to trial new tenancy agreement

McMullen's, the Hertford-based brewer and pub operator, is to offer new tenants a deal that sees them keep their takings in exchange for a percentage of their pub's wet turnover.

The deal echoes elements of a franchise-style agreement rolled out last year by Marston's, the Midlands brewer.

Peter Furness-Smith, McMullen's managing director, hailed the brewer's new agreement as an opportunity for those entrepreneurial individuals looking to take on a tenancy but who had limited cash resources.

"'The Pub Operators Agreement' offers a low cost of entry to entrepreneurial operators who will be empowered to use their skills to develop and grow their own business," he said.

The new deal will be offered on a trial basis to four McMullen's pubs that are looking for new tenants, Furness-Smith said. It was unlikely to appeal to existing tenants who had capital invested in their pubs, he believed.

"We believe the conditions are right for this kind of deal that genuinely shares the risk and demands teamwork between the operator and McMullen's to maximise the potential and therefore earnings of both the operator and the pub," he added.

The agreement sees McMullen's taking a percentage fee of around 20 per cent of the pub's liquor turnover, paid direct to the brewer, plus tenants would pay what it calls a 'good faith' deposit. The more the pub sells, the greater the fee and the more, said McMullens, the operator will earn.

The brewer will stump up for all liquor stock and will cover most of the pub's running costs, while the tenant will be required to pay for any food-related assets, such as kitchen equipment, but will benefit from profits from any food operation. McMullen's would pay for staff at the pub, while the tenant pays no rent.

"We'll be doing a six-month trial to iron out any issues with the agreement," said Furness-Smith, "but if it's clear it works we'll look at rolling it out to appropriate sites earlier."

The deal echoes a retail agreement rolled out last year by Marston's, which is in place in around 165 of its pubs. It plans to have 300 covered by the deal by the end of this year.

Under its agreement Marston's exercises greater controls over an individual site to improve its trading profile and the brewer bears all costs other than staff wages - the licensee keeping a percentage of the revenue.