Lease guide
This section gives a more detailed account of what is involved in leasing a Belhaven pub. Click on one of the topics below if you have a particular query, or scroll from the top to look at all sections.
About Us
Introduction
To many, the idea of running your own business, particularly as the mine host of the local pub, offers not only great satisfaction, but also substantial benefits.
There are several ways in which this aspiration can be achieved. Most brewery companies, and some pub owners, operate their outlets by recruiting a Manager who, as an employee, is paid a salary, but has little say in the development of the business.
At the other end of the scale, the outright purchase of the freehold of the business would offer complete control as well as the financial rewards.
A popular alternative is to lease, whereby the best of both worlds can be achieved by being able to operate the business to your own standards and style but with a reduced capital outlay.
Entering into a lease of a public house is a major decision and commitment, not only in financial terms, but also in the social aspect as to how it reflects on your family or partners, as their support in the venture is vital.
As detailed later, we will provide you with as much information as possible with regard to the trading history of the outlet however; we would recommend strongly that you take independent professional advice before entering into a firm contractual commitment.
The lease document is legally binding on both you and Belhaven and it is important that you have a full understanding of the contractual obligations. If you are unsure on any matters, clarification should be sought from a qualified legal agent.
Our History
While 1719 may be the earliest documented evidence of the Belhaven Brewery, there may well have been beer production on the Dunbar site pre-16th century as the wells and certain cellar vaults are known to date from around the time of the Reformation.
In 1972, centuries of family ownership came to an end as the business was sold, but this end was just the beginning of a twenty-year vibrant and significant period of growth for Belhaven. 1993 saw a management buy-out which enabled the management team to further expand and develop the business resulting in a successful flotation on the London Stock Exchange in 1996. Most recently (2005), Belhaven was bought by Greene King to create a national and well represented pub and brewing company.
The retailing arm of Belhaven has expanded significantly over the past 15 years and has grown to over 200 leased pubs, from Wick in the North to Dumfries in the South. Our licensed operations include student bars and young venues, traditional, family, community and village pubs, bar restaurants, and small hotels.
Our Lease
It is Belhavens aim to offer a degree of flexibility to accommodate the aspirations, needs and resources of a potential tenant. Our principal lease runs for five years, however there are other lengths of lease available.
We will strive to ensure that should the existing tenant wish to renew their lease when the current term ends, he or she will be given first option. This, of course, would be subject to the existing contract having been satisfactorily conducted and the trade maintained at an acceptable level. A recent analysis showed that more than half of all our current tenants have renewed or extended their original lease with us.
We have expanded the variety of tenancy and lease agreements and now offer leases which are free of tie purchasing on soft drinks and machines. Our Beer Barrelage Bonus Plan is unique to Belhaven, with excellent cash rewards at the end of each year on achieving target.
In instances where a new lease is drafted rent is based on what is considered to be the FAIR MAINTAINABLE TRADE (FMT). In calculating the rent, recognition of the Beer Tie conditions are taken into account. Rent is payable monthly in advance by Direct Debit and is liable for Value Added Tax at the prevailing rate. The rent is reviewed annually and is based on RPI minus 1% with a 0% lower threshold.
The lease will include a clause giving Belhaven the right to review the rent on a market value basis at any given point in time, should there be a significant change in either UK or EU legislation striking at the core of the lease contract e.g. abolition of the purchase tie
Pubs
Fixtures & Fittings
Heritable
The ownership of the Heritable Fixtures and Fittings, which includes such items as bar counters, gantries, fixed seating, etc, will remain with Belhaven. The tenant will be responsible for maintaining these items.
Non-Heritable
At the commencement of a 5 year lease, the in-going tenant will usually be required to purchase the non-heritable fixtures and fittings from Belhaven. The value of these will be determined by independent valuation, on an in situ basis.
Repairs & Insurance Obligations
The tenant is responsible for all repairs and decoration internally and external, with the exception of major structural repairs.
A prospective tenant should satisfy himself/herself that the premises are in good and tenantable repair and condition.
The Buildings and the Heritable Fixtures and Fittings are insured by Belhaven and the premium is recharged to the tenant who will be advised of the annual cost. The premium will be charged to the trading account monthly.
The tenant is required to obtain insurance cover for stocks, cash, non-heritable contents, consequential loss, and public and employers liability. It is recommended that the tenant take advice from a reputable insurance broker who has a working knowledge of the licensed trade.
Refurbishment Projects
Belhaven is committed to developing its Leased Pubs and understands that a tenant may not always have the financial resources to undertake alterations of any magnitude, even though there may be a clear commercial benefit.
In such instances, and where the proposals meet Belhavens return on capital criteria, the company will fund improvements in whole or in part with the contribution from the tenant being in the form of a pre-agreed rent increase. This rent increase should be self-funding given the expected commercial benefits of the refurbishment. The tenant will also be expected to meet the cost of the provision of non-heritable fixtures, fittings and contents, over and above any contribution towards the building development project.
All proposals would be fully discussed, evaluated and mutually agreed prior to implementation.
People
Training
We understand the importance of professional and flexible training support to ensure all our tenants are provided with the essential knowledge, tools and techniques to build a successful future. Our experience coupled with the knowledge of our dedicated training providers, ensures we offer the very best in training.
Prior to taking on a Belhaven pub you will be invited to attend our Core Skills training course which runs on two consecutive days and covers the most important elements of running your own pub business: finance, stock management, customer service, staff training, energy efficiency and marketing.
All additional courses are flexible and designed to be selected to fit each individuals level of experience. The cost of each course is deducted from the initial training fees, which are part of the ingoing costs to a new lease. The Operations Manager will advise on the relevant courses to be undertaken. Tenants are also able to attend courses run for Belhaven Managed Pubs, the cost of which can be paid out of their training fund. Each new tenant will be issued with the annual training calendar.
Staff & TUPE Regulations
The tenant must accept responsibility under the TUPE (Transfer of Undertakings Protection of Employment) legislation for ongoing employment of the staff in the business. This means you must employ the existing staff when you take over a pub. You will be responsible for the pay and conditions of employees transferred to you.
Getting Started
Trading Tie
For the duration of the lease period, the tenant is required to purchase exclusively from Belhaven all draught and packaged beers, ales, lagers, ciders, stouts, premium packaged spirits and flavoured alcoholic beverages. Soft drinks, wines and spirits are available free of tie depending upon your contractual terms. We have negotiated keen pricing and marketing support on an extensive range of wines, as well as market competitive barrelage discount plans for selected packaged products.
The trade tie is central to the contractual agreement and must be honoured in full.
Terms of Trade
All trading accounts with Belhaven will fall to be settled, fortnightly in arrears by means of variable direct debits.
Consumable Stock
The ingoing tenant is required to purchase the stock on hand at a mutually acceptable valuation on entry. This can include food, cleaning materials, etc.
Fidelity Bond
The tenant will lodge with Belhaven, a Fidelity Bond, the value of which will be advised at an early stage in the negotiations but will be in the region of 10,000. Subject to the terms of the lease being adhered to, the Bond will earn interest, calculated annually, at a rate of 1.5% below the base-lending rate. The interest payment date is the 31st March in each year. The interest calculated annually will be added to the Bond. The Fidelity Bond plus interest is returned to the tenant at the end of the lease term, less any deductions for outstanding balances.
Amusement & Other Machines
In the majority of cases, the appointment of a machine supplier is at the sole discretion of the Tenant, with all related income for their account, although Belhaven has a say in the number of machines on the premises.
Legal Fees & Stamp Duty
The tenant will be required to meet Belhavens reasonable legal expenses (including stamp duty if applicable) in connection with the granting of the lease. It is advisable to obtain a quote from a commercial lawyer prior to appointment as fees do vary.
The License
Up to 31st August 2009 the Public House or Hotel Licence will be transferred into the name of the tenant. At the end of the lease period, or on termination of the lease at an earlier date for whatever reason, it will be transferred as required by Belhaven without any consideration being paid to/from either party.
From 1st September 2009, and as a result of the Licensing (Scotland) Act 2005, the tenant is required to hold a Personal Licence and will be nominated as the designated Premises Licence Holder. The Premises Licence will be held by Belhaven Group.
Tenants will be required to participate in the Belhaven / Harper MacLeod licensing scheme.
Trading History
Belhaven will endeavour to supply a prospective tenant with as much available information on the property as can be obtained. This will include the beer throughput for the past three years, always on the assumption that the outlet has been Belhaven supplied for that period of time.
Where an outlet has been Belhaven managed, profit and loss accounts will also be made available.
In outlets which have been recently purchased by Belhaven, historical barrelage and turnover figures as available will be issued, but no warranty can be given to their accuracy and the prospective tenant will be require to make his or her own judgement.
Ongoing
Accounts
It is a condition of the lease that quarterly management accounts, VAT returns and annual accounts are submitted to Belhaven. You will be required to use the services of an Accountancy Company nominated by Belhaven for the first 18 months of your lease agreement. Belhaven will contribute 50% of the cost of the basic package to a maximum of 125 per month (2,250 for 18 month period).
Stocktaking
In order to assist with the professional management of the business the tenant will be required to retain the services of a stocktaker nominated by Belhaven.
Business Set Up
Partnerships and Limited Companies will only be accepted in exceptional circumstances, and where permission is given to enter a lease as a Limited Company, then Belhaven will insist on personal guarantees and certain other conditions. It is by far Belhavens preference that our tenants operate as sole traders.
Discount
Where discounts are applicable on draught beers they will normally be paid retrospectively, on a quarterly basis.
Brulines
The Brulines system is installed in the majority of our pubs. This system is primarily to check that the beer tie is adhered to 100% but also benefits the tenant by helping the tenant to control the quality of beer dispense, maintaining costs, yield and the profitability of the business.
Rateable Value
The present rateable value of the property will be made available and it should be noted that it is competent under the current legislation for an appeal to be lodged on a change of occupier within a period of six months.
Support
Business Development & Support
Tenants will have access to an unrivalled portfolio of products, including the top three brands in Scotland: Belhaven Best, Tennents Lager and Stella Artois.
We have a Technical Services team based throughout Scotland which means any issues concerning beer dispense, equipment installation and maintenance can be dealt with promptly.
Our Projects team provide comprehensive management of all refurbishments ensuring developments are completed on time, with the tenants involvement.
We offer a training package which is relevant to our tenants. Current courses include licensing law, customer service, finance and cellar management.
Belhaven, in conjunction with its major suppliers, such as Inbev, Diaegio, Matthew Clark, Schweppes and various other companies, is able to provide established consumer promotions and other marketing support to assist tenants in the growth of their business. Through links with your Operations Manager and our supplier relationships, we can provide advice and support to enable you to promote your business, attract new customers and build sales.
What Next
The Application Process
We take a flexible approach to the application process, with every attempt made to support the preferences of the applicant. You can call us on our dedicated hotline number, or you may prefer to apply online via our website. Either way you will find the details on the back cover of this booklet.
We get a range of different enquiries and not everybody who calls us wants to proceed immediately. Sometimes you might just want to find out more about leasing a pub. For others you may already have identified the pub you want and wish to proceed quickly. Whatever your reason for contacting us we are happy to manage your enquiry in a way that suits you.
For general enquiries our Leased Recruitment Manager will follow up your initial contact to discuss the types of business which interest you. You will have the opportunity to ask any questions you have about Belhaven, leasing and our pubs.
Where you have a specific opportunity in mind you will meet one of our Operations Managers where you will discuss the business opportunity in detail. You may be asked to prepare a business plan prior to the meeting.
Our website is updated on a daily basis and if you become a subscriber you will be notified when the type of pub you are interested in becomes available. If you prefer we can send you a monthly update by post.
The Recruitment team and our Operations Managers are available at each stage in the process to answer any queries you may have. We are never more than a telephone call away!
www.belhavenpubs.co.uk
Recruitment Hotline
01786 476221
Belhaven Leased Pubs
1 Logie Road
Causewayhead
Stirling FK9 5JU
tel: 01786 463074
fax: 01786 450279
email: tenancies@belhaven.co.uk
Belhaven Managed Pubs
Atrium House
6 Back Walk
Stirling FK8 2QA
tel: 01786 464446
fax: 01786 465655
Greg McMullan
Greg McMullan, Lessee of the Abercromby Arms, Tullibody. Read his story
