Tenancy agreement
A tenancy is a great way to get into the industry and is widely recognised as a cost-effective way 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 staff to the 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. You will usually be able to roll the agreement for another 3-5years if you wish to do so.
Everards tenancy agreements are three years and are protected by the Landlord & Tenant Act which means that if you stick to the terms of your agreement, you can keep re-signing every three years, so the ball is in your court if you wish to stay or not unless you break the terms of the contract.
You will need to check your notice period should your situation change and you need to exit the business (these can vary from 6 months to the end of your 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.
As part of a tenancy agreement, some pub landlords will support with refurbishments and have ongoing schemes to refresh their buildings internally and externally every 5 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 stock 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’.
If you wanted to exit your tenancy at any point and leave the pub you are running, you’d have to work out a notice period and there may even be penalties for breaking the contract early if it’s before your contracted time comes to an end. You would not be able to sell any “goodwill”.