Are you a lamb to the slaughter?

By Robert Sayles

- Last updated on GMT

Related tags: Pubco, Renting

Robert Sayles: 'Tenants should be prepared'
Robert Sayles: 'Tenants should be prepared'
Neil Robertson recently stated that the prospect of naive new tenants entering the trade was a major source of concern. With this in mind I’ve devised a questionnaire so that those thinking about entering the trade can gauge whether or not they fully understand what they’re getting themselves into.

Simply read the questions and select the most appropriate response.

1. The pubco says the pub you’re looking at is a fantastic once in a lifetime opportunity.

Do you:

a) Sign there and then before someone else beats you to it.

b) Point out that’s it’s been a once in a lifetime opportunity for three other tenants in the past twelve months.

2. Your pubco suggest a refurbishment would benefit your business.

Do you:

a) Give them the go-ahead to proceed with the project.

b) Realise they can’t afford to invest in their dilapidated run down pubs and are merely looking for a mug to foot the bill.

3. How would you describe your BDM?

a) A parental figure, always ready to offer guidance and support.

b) A lying, duplicitous rogue who possesses scruples that would make a second hand car salesman appear positively saintly.

4. Your BDM rings you to say he has some exciting ideas to help you grow your business.

Do you:

a) Wait with bated breath for his spellbinding words of wisdom.

b) Point out that you already sell coffee and give him some suggestions as to what he can do with his input.

5.Your other half looks out of the window and exclaims “Oh sh*t, the bailiffs are here!”

Do you:

a) Assume they’re popping in for a pint and a friendly chat.

b) Run to the tool box, grab the hammer and start nailing things down.

6. The pubco claims that signing an agreement with them entitles you to lots of countervailing benefits.

Do you:

a) Visualise van loads of goodies arriving on a regular basis.

b) Realise it’s complete bollocks and resign yourself to receiving buggar all.

7. The rental agreement offered by the pubco is linked to RPI.

Do you:

a) Assume this link ensures rental premiums can go down as well as up.

b) Acknowledge it’s merely a ploy to ensure your rent heads north whilst volumes continue their journey southwards.

8. The pubco informs you that their tenants are very happy with the tie.

Do you:

a) Assume all the bad press about the tie is mere scaremongering from the anti-pubco faction.

b) Conclude that the tie merely incentivises pubcos to raise beer prices on a regular basis to inflate profits.

9. The pubco suggest that signing a lease is advantageous as it’s a secure agreement.

Do you:

a) Assume this offers your business the stability it needs going forward.

b) Be aware that there is no way out as it will be virtually impossible to assign.

10.The pubco tells you an FOT option is available.

Do you:

a) Conclude that pubcos have finally come to their senses and are willing to offer you a fairer deal.

b) Recognise that they’re looking to secure margin in a falling market by hiking dry rent.

11. The BDM informs you that the rental premium meets RICS guidelines.

Do you:

a) Assume the BDM is familiar with current RICS recommendations on rent setting.

b) Realise that he’s merely taken the rent paid by the previous tenant and added 10%.

12.You wish to purchase an assignment. The property agent asks you for a non-refundable deposit.

Do you:

a) Pay the fee, secure in the knowledge that it offers protection against gazumping.

b) Walk away as it’s obvious that the agent’s primary focus is on securing a lucrative upfront fee.

13. The pubco states that you’re obliged to purchase your buildings insurance from them.

Do you:

a) Assume that with their buying power you’ll get a good deal.

b) Recognise that it’s merely another money making scam and resign yourself to being charged double the market rate.

14. You’re informed that after two years you’ll be able to assign your lease.

Do you:

a) Anticipate selling the business on for a tidy profit.

b) Check to see if the lease contains a clause which ensures you’ll still be responsible for the business long after you’ve moved on.

15.The pubco insists that being tied for AWPs is beneficial for you.

Do you:

a) Assume they know what they’re talking about.

b) Suspect they’re still trousering 75% of the profits and ask for proof of a rent reduction.

16. Your BDM tells you that the FMT level set is both realistic and achievable.

Do you:

a) Acknowledge that he knows rather more about the outlet than you.

b) Suspect the figure is vastly inflated to justify the onerous rental premium.

17. The pubco tells you that they’re paying out millions to support tenants during these difficult times.

Do you:

a) Wait expectantly for a cheque to arrive through the post.

b) Realise that the money is being used to prop up increasing numbers of pubs farmed out to holding companies.

18.Your BDM says you don’t need to carry out a survey as the pubco conducts one at each changeover.

Do you:

a) Forego the survey to save a few bob.

b) Ignore your BDM’s advice because he’ll be long gone when you finally move out and you’ll be clobbered with inflated dilaps.

19. A gentleman from Brulines arrives and accuses you of buying out.

Do you:

a) Assume there’s been a mistake but do nothing when the pubco deduct money from your account.

b) Remind the gentleman that the equipment is unfit for purpose and inform your pubco that you’ll see them in court.

20. You are trying to obtain a rent reduction and the pubco recommend PIRRS.

Do you:

a) Agree in the hope that it will result in a favourable outcome.

b) Realise the system is heavily biased in favour of pubcos and opt for arbitration.

How did you score?

A answer = 1 point

B answer = 2 points

20 - 28 – Lamb to the slaughter.

Just save yourself a lot of pain and heartache and hand over the house keys now. Let’s face it; they’re going to get them eventually anyway.

29 - 36 – Some way to go.

You’re wising up but still prone to moments of gullibility.

37 - 40 – A street wise publican.

Well done! It’s unlikely anybody’s going to pull the wool over your eyes.

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