FAQs 2017-11-03T22:16:55+00:00

I am getting a lot of questions at the
moment regarding the new pub code legislation and MRO,

So here are a few of the most common.
If you have any questions not covered please drop me a line.

What is the Pubs Code, and to whom does it apply? 2017-11-15T20:46:03+00:00

The Pubs Code is a piece of government legislation that was passed into law in July 2016. The legislation governs the relationship between a Tied Pub Tenant (‘TPT’) and the Pub Owning Business (‘POB’)  – assuming the POB currently owns more than 500 tied pubs.

Which Pub Owning Businesses (‘POB’) does the Pubs Code Regulate? 2017-11-15T20:45:42+00:00

Currently there are 6 POB’s with more than 500 tied pub sites covered by the legislation, namely: Ei Group (formerly Enterprise Inns), Punch Taverns, Greene King, Star Pubs & Bars (Heineken), Marston’s and Admiral Taverns.

Does the Pubs Code cover Scotland? 2017-11-15T20:45:13+00:00

At present the Pubs Code only covers England & Wales.

What is a Market Rent Only (‘MRO’) offer? 2017-11-15T20:44:55+00:00

A MRO offer is a new right afforded to Tied Pub Tenants (‘TPT’) of one of the 6 major Pub Owning Businesses (‘POB’), that forms a part of the Pubs Code legislation. It allows the TPT to request and consider a Free of Tie offer from the POB at certain points in time – as explained within our ‘Trigger Events’ section.

Can I request a MRO offer a Tenancy at Will (‘TAW’) agreement? 2017-11-15T20:44:20+00:00

In order to request a MRO offer a trigger event must occur. Owing to the short-term non-substantive nature of a TAW agreement it’s unlikely you would be eligible.

My lease is due for renewal soon – does this mean I can definitely go free of tie? 2017-11-15T20:43:51+00:00

Assuming your lease is protected by the Landlord & Tenant Act – the receipt of a Section 25 notice will serve as a trigger opportunity to request a MRO offer. Assuming the POB doesn’t object to renewing your lease – then this is a straightforward trigger opportunity. Regrettably, as the possibility of going free of tie can impact on the POB’s profit, the likelihood does increase that the POB will choose to object to a renewal to incorporate the site into their managed division. If you’ve been served such a notice we advise you seek professional advice right away to consider your options – especially if you disagree with any of the grounds for objecting to a renewal.

How much will it cost me to go free of tie?
 2017-11-15T20:40:59+00:00

This depends on a number of factors, such as the MRO rental, your current deposit balance, legal completion costs, professional fees, etc. For an accurate assessment we advise you get in touch – as depending on the nature of agreement, costs can be considerable.

Will I be subject to a stocking requirement on a MRO agreement? 2017-11-15T20:40:09+00:00

Currently the 3 POB’s that also brew their own products propose a stocking requirement as part of their standard MRO response. This may be rejected on the basis that such a requirement is “uncommon” in a normal free of tie agreement, and this can be determined on a case-by-case basis by the Pubs Code Adjudication (‘PCA’).

How long will the MRO process take? 2017-11-15T20:38:39+00:00

This will depend on a number of factors, such as whether the proposed MRO lease terms are agreeable, and whether the MRO rental requires an independent assessor which tends to be the case. The MRO rental may further be subject to an appeal which can also delay completion. Typically at the moment we would advise that the process usually takes 6 – 12 months to complete.

If I request a MRO offer, can I still agree a tied deal? 2017-11-15T20:38:23+00:00

The MRO process is specifically designed to allow a “parallel rental assessment”. This effectively means that until agreement is reached both the tied and MRO offer can be discussed and progressed alongside one another. So in short – yes.

 

Will I definitely be better off if I agree a MRO offer? 2017-11-15T20:33:06+00:00

This will depend on the nature of your existing agreement terms, and the nature of your business. Generally the more tied beer you sale as a percentage of turnover, the greater the potential gain. However, it will also depend on your current rental. So whilst generally a wet-led site will be better off, there are no guarantees.

Under a MRO agreement, what will the nature of my relationship with the POB be like – and will I still see my RM/BDM? 2017-11-15T20:32:29+00:00

Once free of tie, you would become a commercial tenant. Therefore the ‘support’ offered by the POB would cease, and the RM/BDM relationship would no longer be necessary.

How long will my MRO agreement last? 2017-11-15T20:32:17+00:00

As per the Pubs Code, a MRO agreement must be offered for at least the equivalent length of term as your existing agreement. With some tenancies of a short-term nature this can render a MRO agreement somewhat irrelevant, so it does require careful consideration.

I have a trade debt with my POB – can I still go MRO? 2017-11-15T20:32:06+00:00

The POB cannot prevent you from exercising your legislative right to a MRO agreement if you have a trade debt – although you will need to settle the balance in full prior to the granting of a new agreement.

If I agree a tied deal now – will I still be eligible to consider a MRO again in the future? 2017-11-15T20:30:45+00:00

Yes – agreeing a tied deal doesn’t alter your future legislative rights, but you would obviously need to wait until the next trigger event’s occurrence, such as at the point of your next rent review.

I have an old style lease with favourable terms. If I go MRO, will I have to agree a new lease on worse terms? 2017-11-15T20:31:23+00:00

In line with the Pubs Code legislation, you cannot be subject to any terms which are “uncommon” in usual free of tie agreements – and you are entitled to reject any such onerous provisions. However as your existing agreement is tied, there may be some provisions that are common place in the free of tie marketplace that you aren’t currently subject to – and some of these may be less favourable – such as quarterly rental payments for example. Therefore it is possible that some terms will differ, and it’s important to consider the bigger picture in relation to whether a MRO agreement is right for you.

Overall I’ve heard pretty negative reports surrounding the MRO process & Pubs Code Adjudicator in the trade press. Is a MRO worth the bother?
 2017-11-15T20:30:19+00:00

We agree that there are significant improvements that need to happen in order that the MRO process functions as intended. However we also believe that it’s a massive step in the right direction, as the vast majority of our clients have improved their position. Therefore we would urge every single Tied Pub Tenant to request a MRO offer when entitled to do so, and seek professional advice to negotiate the best possible outcome for your business.