Professional Advice for Business Planning and Dealing with the Unexpected

Nobody is an island. We all need support from time to time and never is that truer than when running a business. New entrants to the pub trade, and even seasoned industry veterans, will at key points need professional help to grow and sustain a successful business in today’s challenging climate.

The Pubs Code reflects this, and requires pub companies to advise its tied tenants to obtain independent professional advice about rent, premises, insurance arrangements and any other significant contractual responsibilities before making decisions that could impact their business. Professional advice is also important when the unexpected happens. The PCA strongly encourages all tied tenants to get that expert advice, and it is important to find the right professional. Before they choose an expert, tenants would be wise to check whether an adviser is familiar with the tied pub trade and with tenants’ Pubs Code rights.

Professional advisers 

It can be confusing to know where to look for professional advice, and trade bodies can be a useful starting point. For example, the British Institute of Innkeeping (BII) has expert helplines which offer tied tenants 30 minutes free advice from industry and business professionals. 

I recently spoke at a forum for BII Accredited Advisers and discussed the important rights the Pubs Code gives to tied tenants. The BII supports this network of independent accredited advisors: accountants, chartered surveyors and solicitors who offer expert advice for tenants at all stages of their pub journey. Again, a 30-minute introductory call is available to members. This is a worthwhile service I know many licensees have benefited from, and all tied tenants who have substantive agreements covered by the Pubs Code can use this service. All six regulated pub companies – Admiral, Greene King, Marston’s, Punch Pubs, Star Pubs, and Stonegate – take out BII membership which covers their tenants and those negotiating for a tenancy.

Industry trade body UKHospitality has a wealth of resources for licensees from which multiple operators in particular can benefit. Its supplier directory includes professional advisers such as specialist solicitors. UKH also offers a legal advice helpline which its members can access when needed. Tied tenants may also be members of other trade bodies which they can approach.

Dealing with the Unexpected

When the unexpected happens it can derail even the best thought out business plan and undermine the trading forecast on which it was based. As well as staying in communication with their pub company at such times, it is also important for tied tenants to get independent professional advice to help them work out the right way forward.

Trigger events

The Pubs Code can help in these kinds of situations. If an unforeseen event has had a significant impact on the trade of the pub, the Pubs Code may allow tied tenants to get a rent review, and to request a free of tie Market Rent Only option from their pub company. This is called a ‘Trigger event’, which must meet several conditions set out in the Pubs Code. 

Tenants need to be aware they must be able to show that the unforeseen event is not connected to their personal circumstances (such as health), could not reasonably have been prevented or its impact substantially mitigated, and can be expected to decrease trade in each of the following 12 months.

Any forecasted effect on other pubs must include others in the local area, and not all pubs in England and Wales. It cannot be an increase in tied prices beyond the pub company’s control. Where other pubs are affected, the event must be related to a change in the tied conditions or to the local area, e.g. infrastructure, employment, the long-term economic environment or environmental factors. This might include things like a new railway line being built very close to the pub, which affects the view and noise level - or a major local employer closing down. It is important to understand all the conditions for a ‘Trigger event’, and more information can be found on the PCA’s factsheet.

Understanding the Options

Perhaps surprisingly, very few tenants have sought to access the valuable rights available by demonstrating a ‘Trigger event’ has occured. It may be that pub companies have shown willingness to negotiate over the rent if something unexpected happens to affect the viability of the tenant’s business. However it may be related to the range of conditions which must be met before the tenant can show a trigger event has taken place. The government will shortly begin the statutory review of the operation of the Pubs Code, and perhaps evidence will be forthcoming about this.

The need for a tenant to understand their options when an unexpected event occurs is even more reason to choose a professional adviser who understands the Pubs Code, so that they can fully benefit from the protections and opportunities it provides. The PCA wants to support tied tenants and their advisers to understand their Code rights, so their businesses can continue to be sustainable - even when the unexpected happens.