From my experience entering the trade via the leasehold route can be similar to that other rite of passage “marriage”.
The first meeting and flirtatious interest is followed by the early courtship period when all is a bed of roses and high expectations from both sides. The only person who has doubts about the relationship is probably the mother in law, aka the pubco bemoaners.
The marriage takes place (contracts to lease are signed) and all is well for a period. Then one party considers the other party to be taking advantage which leads to “buying out”, well that’s one way to put it, followed by a breakdown of the relationship, then a messy divorce.
What you never hear about are those individuals who enjoy many years in happy relationships, living in harmony with each other, making a good living out of their leased business and enjoying the high quality of life that goes with it.
'Talk things through'
For those who have just taken on a pub lease or are about to, my advice is, like in any good marriage, talk things through — ie, maintain good communications and don’t bury your head in the sand. Get grievances out into the open and amicably settled. Like with any good relationship, honesty is the best policy. As with a marriage breakdown, the only winners tend to be those in the legal profession!
Your goal and mission is to provide a good secure living for your marital partner and family based on a long term relationship between you and your partner (pubco BDM) which should be one of the highest integrity and have trust on both sides. However, the relationship has to be worked upon.
One of your goals will be smooth negotiations leading up to a rent review (a bit like a wedding anniversary) or around a tricky supply issue. I’m not saying send your BDM a bouquet of flowers but you are more likely to get a satisfactory result if respect is shown from both sides and your life will be less stressful and your business more profitable.
Running a good pubco tied business can be extremely rewarding for both parties and a lot of fun but it does take two.
You can make immense profit from selling on your leased business at a premium, but that premium will be determined by your levels of profits and the desirability of your busi-ness, which again is re-flected and influenced by the relationship that you have with your BDM.
Remember, like a high profile divorce, you only hear about it when things go irrevocably wrong.