Wednesday, February 20, 2008

This will go off topic but it’s all related to business support from the PubCo and what, in my experience, can be expected by any ingoing lessee – and that is, you guessed it: NOTHING.

There has been only one BDM on my patch that ever did anything positive for me and my business and that was a woman. And she admitted that her remit as a BDM was extremely limited because the scope of her power was so small - no free stock, no pos material, no training - of any description – available because none of this was part of the company package. Please believe me reader, NOTHING... Apart from the woman, who set diary dates for meetings and whom I met regularly, pretty much the only time BDM's have made visits to me have either been unannounced or when I have called and demanded to see them.

I’ve had two BDM's tell me that until my rent review is concluded there's not any point in making visits because there's nothing they can do because the buildings side of things is outside their area of influence. - this is two different rent reviews by the way - and when I asked both times - what do you do when there's not an outstanding matter like that? What practical thing have you ever done for me? Well sadly the answer is NOTHING. I’ve had BDM’s tell me that if they worked for me they would make my business make so much money I wouldn’t believe it… (?). I had one BDM tell me, as we were looking at the back bar fridges, that if I stacked Holsten Pils in rows of three, labels facing forward, in a three shelf column up the fridge, it would increase sales dramatically. When I pointed out ‘we don’t stock Pils’ he didn’t even bat an eyelid ‘Well, you know what I mean’.

I wrote to one BDM, who was being promoted to regional something or other, asking if he could kindly put together a list of BDM visits, dates and times, and of product support, training, service, money, incentives - anything – that had been offered to me as part of the PubCo support package since I signed my lease, that might be considered countervailing benefit for paying so much for my beer for ten years. He said this was an arduous task and would look into it... never heard from him about that again.

I asked successive BDM’s what permission do I need for doing work to the premises because I’m always improving things – new toilets, new central heating and so on, they said I should get in touch with my building surveyor. I asked my buildings surveyor in writing for permission to do several different projects that I considered were significant improvements to the property that would increase trade, and was told each time in writing that he considered that I didn't need permission. These included:

New water supply and pipe work and new gas supply with bigger diameter pipe work because existing supplies were domestic and could not support demand of the business. Building planters around forecourt, disabled access ramp to the front doors, extraction and ventilation in the kitchen. Barbecue bar in garden, awnings in anticipation of smoking ban stuff like that. There was more, offhand I can't remember what, but the total cost to me would be about 30K. None of this, in his opinion, was 'improvements' to the premises just repairs and maintenance and so did not need permission.

Eventually I wrote to ask exactly what constitutes 'improvements' that I should seek permission to carry out. I paraphrase but it was something like “Anything of a structural nature that needs consent of the statutory authorities would be regarded as worthy of needing permission and Licence to Alter”.

This at last answered the conundrum I'd had for years over my first rent review when 'fair maintainable trade' was being discussed. The surveyor I hired to do my first rent review told me I should have obtained Licenced Agreement from the PubCo to do the initial refurbishment because it was clear that the PubCo was now rentalising imy investment and there was nothing I could do about it. I said had no argument that fair maintainable trade was high only because I – LITTLE MOI - had spent all that money changing their run down, falling apart, rotting premises that had had nothing spent on it for twenty years, into a vibrant, trend setting destination venue that pulled in people from a five mile radius.

Fair Maintainable Trade. My pub had 6 barrels recorded volume the year before I signed my lease and turned over no more than 1K average a week – I had been a regular there for a year and knew the outgoing licensee (it was also marketed as coming free of tie in 1998 but that is another story)… I showed the PubCo a highly detailed business plan and narrative that clearly indicated I was going to spend 150K on a refurbishment. I also had to prove to the PubCo that I had the finance in place to match the ambition of my business plan. They had absolute certainty that I would spend that money on their premises. As far as I knew I didn’t have to ask for permission to carry out the work because I’d clearly stated that in my business plan, which they demanded to see as evidence of my suitability to be a lessee and had proceeded to scrutinise before agreement to lease (I’d also previously been a licensee for six years).

Dear reader you may think I was naive but no one, absolutely NO-ONE, my original surveyor, solicitor, accountant, prospective BDM, sales agent, advisor nor friends, told me that I should get Licence to Alter from the PubCo before spending my life savings and considerably more on the property that I was about to lease. OR that they would rentalise everything – my capital input – my flair – my industry – my experience – the goodwill I had established in my award winning pub - at the first rent review. Where the rent was 32K and they wanted 75K and we settled on 54K after 15 months of ‘negotiations’ which nearly put me out of business…

SO “Anything of a structural nature that needed statutory consent of other authorities would be regarded as worthy of needing permission and Licence to Alter” took me back in a flash to the outset of my journey of PubCo deceit.

I spent, in fact, well over 150K on their premises and none of it, not one single little bit of it was structural. And then they charged me for it. That’s a bit rich isn’t it.

In practice it’s quite possible to spend quarter of a million quid, do nothing structural and, technically, not need the consent of the PubCo. Why is this? So they can then rentalise all this stuff they regard as ‘maintenance and repairs’ – simply keeping the building in its original lettable condition and therefore not likely in any was to affect trade.

So I took a pub that had a factual gross turnover of less than 60K a year, to a factual gross turnover of 600K a year and from 6 barrels to 500 a year, and they try to more than double the rent because their idea of FMT is 700K. Brilliant.

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