The Royal Oak in Earlsdon pursued a Market Rent Only (MRO) lease to gain greater control over its product range. However, the landlord stipulated an excessive stocking requirement, restricting supplier choice. MDE Pub Consultants successfully took the case to arbitration, contesting the unreasonable terms and securing the tenant’s right to operate with genuine independence.
An Unreasonable Stocking Requirement in the Proposed MRO Lease
The Royal Oak in Earlsdon, a well-established public house with a loyal customer base, sought to go free-of-tie under the Market Rent Only (MRO) option provided by the Pubs Code. Their objective was to gain greater control over beer selection and supplier agreements.
However, the landlord’s proposed MRO lease included an excessive stocking requirement, obliging the tenant to continue purchasing a large proportion of beer products solely from the landlord’s approved list. This stipulation effectively negated the core purpose of opting for MRO status, severely limiting the pub’s ability to source diverse products at competitive prices. Recognising these terms as unreasonable and inconsistent with a true free-of-tie agreement, the tenant engaged MDE Pub Consultants for expert support in contesting the proposed lease terms.
Taking the Case to Pubs Code Adjudicator
Understanding the detrimental impact of the restrictive stocking requirement, MDE Pub Consultants took the following steps:
- Referred the disputed MRO lease terms to the Pubs Code Adjudicator (PCA), arguing that the proposed conditions were inconsistent with the principles underpinning the MRO process within the Pubs Code.
- Presented a compelling case before an independent arbitrator (appointed under the PCA framework), clearly demonstrating how the landlord’s stocking requirement restricted product choice and undermined the spirit of the MRO legislation.
- Contested the necessity and proportionality of the landlord’s terms, proving that a significantly reduced stocking requirement would still satisfy reasonable commercial interests whilst ensuring genuine operational independence for the tenant.
By leveraging our extensive experience in arbitration and Pubs Code negotiations, we successfully opposed the landlord’s unreasonable proposal.
A Fair and Balanced MRO Lease Achieved
As a direct result of our expert representation and strategic arguments during the arbitration process, the arbitrator ruled substantially in favour of the tenant. This led to:
- A Significantly Reduced Stocking Requirement: This allows The Royal Oak to source a far greater range of beer products from independent suppliers, enhancing choice and negotiating power.
- A Fairer MRO Lease: The final terms uphold the principles of a genuine free-of-tie operation as intended by the Pubs Code.
- Greater Product Choice and Flexibility: This enables the pub to curate a diverse, high-quality selection of drinks better suited to their specific business needs and customer preferences.
MRO Terms Must Be Fair and Reasonable
The Risk of Restrictive MRO Clauses
This case highlights instances where landlords may attempt to impose restrictive conditions within MRO lease agreements that undermine the fundamental principle of free-of-tie trading. Without expert representation, tenants might unknowingly accept unreasonable terms, thereby limiting the intended benefits of transitioning to an MRO lease.
Ensuring Fairness with Expert Representation
At MDE Pub Consultants, we specialise in identifying and contesting unreasonable lease conditions, whether they involve stocking requirements, rent proposals, or repair obligations. Through meticulous analysis, skilled negotiation, and robust representation in arbitration if needed, we work to ensure tenants receive a fair agreement that genuinely allows them to operate independently under the Pubs Code framework.
A Word from Howard Grundy, Tenant at The Royal Oak, Earlsdon
“Going free-of-tie should mean exactly that—freedom to choose the products that work best for our business. However, the initial MRO lease proposal from our landlord included an unreasonable stocking requirement that would have severely restricted our ability to source the beers our customers want.
Michael and MDE Pub Consultants took the fight to arbitration, expertly arguing our case before the Pubs Code Adjudicator. Thanks to their knowledge and determination, we secured a significantly reduced stocking requirement, allowing us to bring in a wider range of products at competitive prices.
Without their support, we could have ended up with a so-called ‘free-of-tie’ lease that still kept us tied in many ways. Now, we have real flexibility, better supplier options, and a stronger business as a result. I can’t recommend MDE Pub Consultants highly enough to any tenant looking to challenge unfair lease terms.”
Secure Your Pub’s Freedom and Fair Terms
Are you facing unreasonable MRO lease terms, excessive stocking requirements, or other challenges under the Pubs Code? Don’t risk accepting a lease that limits your independence and profitability.
Like The Royal Oak, you can achieve a genuinely fair free-of-tie agreement with expert help. Contact MDE Pub Consultants today. Let our specialists review your situation, advise on your rights, and provide the strategic support needed to negotiate or arbitrate for the best possible outcome for your business.
Get expert MRO and Pubs Code representation – Get in touch with MDE Pub Consultants now.
Email: info@mdepc.co.uk
Phone: 0330 088 3133
