Iain Jackson, operations director Leased & Taverns, told delegates at the Tenanted Pub Company Summit that the pub world is full of distrust because the risk/reward equation had become unbalanced.
He said that with a traditional tenancy, when a pub’s trade falls: “We suffer with the tenant, but the tenant takes more pain, because they have fixed bills to pay. The tenant has no choice but to continue, while the brewery has the choice about whether or not to help them. That breeds resentment.”
Jackson revealed that – before it launched its franchise operation – Marston’s was achieving tenant satisfaction scores of 60% or 70%, compared to average franchisee scores of 90%.
He added that as a result: “We have had to go further than the normal franchises adopted by Costa, McDonalds, Burger King.”
In its franchises Marston’s has removed rent, removed all costs apart from staff wages and provides products on sale or return. Marston’s franchisees simply earn 20% of the pub’s turnover, with additional incentives based on pub profits.
“If you have one P&L on the table and both parties are working off that one P&L it forces you to talk about the same things,” said Jackson. “There is no other agenda.
“Franchising is not the silver bullet. It takes time to do it and a lot of investment, but it’s well worth doing. It’s the best of the managed world and the best of the tenancy world.
“The franchisee brings the local knowledge, the flexibility and the understanding, and the franchisor brings the corporate power, the buying power, the resources and insights. It’s a very powerful combination.”
Jackson said that the British Franchising Association, which accredits franchisors, sets very high standards for its members. “The BFA are very quick to remove anyone who drags their name down or take the industry backwards. They don’t mess about.
"The BFA will audit us every two years. They will look at your churn rate; if you have churn they will assume you have no proven model or are acting unethically – that the franchisor is taking too much out of the model. They will also ask for feedback from all your franchisees, and if that is negative about you, your systems or support and if that feedback is negative they will do a full audit on you.”