A tenancy is a great way to get into the industry and is widely recognised as a cost-effective entry into the pub world compared to alternatives such as purchasing a freehold.
Taking on a tenancy means you won’t own the pub, you’ll rent it from the pub owner, but you’ll run the business as your own. You will manage every aspect of the business from staffing to food and drink range, and everything in between.
Generally, there will be an agreed right to occupy the pub, this can range from 3-5 years depending on who you choose to work with. Many tenancies allow you to renew for a further term of 3-5 years and so on thereafter but some don’t, so it is important to check this point.
Everards tenancy agreements are three years, and they are protected by the Landlord & Tenant Act, which means that as long as you do everything you sign up for in your agreement, for example paying your rent on time, you can keep re-signing every three years, so the ball is in your court if you wish to stay or not. The Everards tenancy agreement allows you to serve 6 months’ notice to leave at any time should you wish to do so for whatever reason. Not all tenancy agreements are like this so it is sensible to check whether there is a notice period should your situation change, and you need to move on from your pub business. Otherwise, you might be held to the end of the remaining contract.
Rent is calculated in different ways depending on who you go with, you can check out how Everards charges rent to give you some guidance. To expel any concerns or myths, most pub companies want you and the pub to succeed, they will not unjustly increase rent, so it is important to ask everyone that you talk to, how they calculate rent both at the start and when/if you renew.
As part of a tenancy agreement, some pub landlords will support with refurbishments and have ongoing schemes to refresh their buildings particularly externally every 5 or so years to keep the pub looking its best to support the business owner in offering the best trading experience for their customers. Check this is something the pub company you are talking to offers, if not make sure to include these extra costs in your business planning.
Tenancies are quite often ‘full tie’, this means that you have to buy all of your drinks stock and maybe other items from the pub company directly. Everards won’t make you commit to this, instead, they have their own tie, which they call the ‘Everards supplier agreement’.
The Everards tenancy does not allow you to sell or transfer your business to anyone else. You can serve notice or hand the property back at the end of the term.