Harveys could apply pub franchise agreement to future pub acquisitions

The franchise agreement has operated at the John Harvey Tavern in its home town of Lewes, effectively Harveys’ brewery tap, for seven years.

Billed as a hybrid agreement between managed and tenancy, it sees Harveys keeping an influence over most aspects of the pub’s operation.

The franchisee pays minimal in-goings and is responsible for variable costs such as staffing and food purchases. The licensee takes net profits from the venue and pays a monthly franchise fee, which covers the equivalent value of rent plus other costs such as depreciation and maintenance.

In return, the landlord is responsible for fixed costs such as business rates and property insurance.

Harveys has expressed reservations that the concept could be applied readily to average pubs. However, Elder said it has been used on occasion as a “stop gap measure” between different tenants, where, for example, a young couple may want to take a pub for three to six months to move away from managed houses, but without having to pay big in-going costs.

Asked if the franchise could be applied to other pubs it acquires, Elder said: “It’s a possibility. There are always pubs coming on the market. There are one or two of those where we don’t imagine recruitment of
fully-funded tenants is very easy so we may wish to put in a franchise.”

Harveys currently operates 47 pubs, and earlier this year bought its second in London, the Cat’s Back in Wandsworth.