Code of Practice. On Letting Timothy Taylor Tenancies Timothy Taylor & Company Limited v1

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1 Code of Practice On Letting Timothy Taylor Tenancies Timothy Taylor & Company Limited 2010 v1 TIMOTHY TAYLOR & CO. LTD. KNOWLE SPRING BREWERY KEIGHLEY BD21 1AW

2 THIS CODE We have developed this code to help you understand the way in which our tenancies work and the way we do business. In return for our support we expect high standards from you in the way you operate your business. We always want to develop a relationship of trust with you so it is important that you fully understand your commitments. THE TIMOTHY TAYLOR ESTATE In 1858 Timothy Taylor began brewing beer in Keighley and he clearly struck upon a successful formula, for in 1863 he set up and built a larger brewery at Knowle Spring where production continues today. The brewery remains in the Taylor family and is the last independent brewery of its type in West Yorkshire. Ever since Timothy Taylor bought his first pub in 1859 the company has developed and maintained a thriving tenanted estate. Today the company owns 20 tenanted pubs mainly located in West Yorkshire which provides business opportunities for tenants seeking a relatively low cost entry into the pub business. The pubs range from community locals (pubs which generally attract customers within a short radius) to destination food pubs (pubs attracting customers from further afield and whose main reason for visiting is to eat). Over the past few years a number of pubs have been refurbished as part of an extensive investment programme. During all these improvements our aim has been to ensure each pub retains its own identity and heritage. Timothy Taylor & Co. Ltd. is a member of the British Beer & Pub Association (BBPA) and, as such, we offer high standards of fairness and transparency to our tenants. This Code of Practice follows the pub industry Framework Code of Practice and is accredited by the British Institute of Innkeeping Benchmarking and Accreditation Service (BIIBAS). As members of the BBPA, Timothy Taylor also subscribes to the Pub Independent Rent Review Scheme (PIRRS). This Code of Practice is issued for the information of existing and prospective tenants and confirms the Company s best practice in the letting and joint operation of our pubs. 2 P a g e

3 TYPES OF PUB BUSSINESS There are different opportunities within the pub business as highlighted below. Managed House: owned and operated by the parent company. Profits are retained by the company. Tenanted House: owned by a parent company but let to an operator who will be obliged to buy certain products (The Tie) through that company (unless it is free of tie) and pay a rent. Profits are retained by the operator. The tenant will also be required to invest in certain fixtures and fittings. The tenancy will not be assignable i.e. you cannot sell on the tenancy. Lease: owned by a parent company but let to an operator who will generally be obliged to buy certain products through that company unless it is free of tie and pay a rent. Profits are retained by the operator. Besides investing in the fixtures and fittings there are generally obligations to repair the fabric of the building. There is generally a premium to pay to buy the lease but the lease can also be sold after a certain period of time, the value of which is reflected in the level of business and condition of the building and fixtures. Freehold: a pub free from tie and usually owned and operated by the same person. Timothy Taylor operates both managed houses and tenancies and we are always looking for entrepreneurs to join us. If it s a managed house role you would prefer you can apply on line at or call us on OUR TENANCY AGREEMENT Timothy Taylor offers a 3 year traditional tenancy agreement which is contracted out of the Landlord & Tenant Act This exemption removes the right of tenants to automatically renew their agreements. Terms in excess of three years are also available by negotiation and are also contracted out of the Landlord and Tenant Act Unlike some leases offered by other pub companies our tenancy agreements are not transferrable or assignable. Under this Agreement you will be tied to us for the purchase of all draught cask and keg beers, lagers, stouts and ciders which are sold to the tenant at the producer s list price, without discount. However, you are free of tie for wine, spirits, minerals and bottled beers. There are no other ties on any products (other than amusement machines). The tie is fundamental to the business and if you 3 P a g e

4 break the obligation to purchase draught beers from ourselves you will be in breach of the tenancy agreement and as such may be given notice to quit the tenancy. If you are in breach we may also charge you 150/barrel for every barrel/part barrel bought outside the tie. We will set out the principles of our agreement at the conclusion of our negotiations in the form of Heads of Terms and will provide you with a full copy of the tenancy agreement before you are asked to sign any commitment. Please note that there is no cooling off period following entry to the business. However please see comments on page 11 under the heading Surrender of Tenancy. PRE-ENTRY REQUIREMENTS If you are new to the licensed trade we require you to undertake a short training course 1 to ensure you are fully aware of the nature of the contract you will be entering into and that you know exactly what is involved in running a pub business. (This requirement may only be waived if you are able to demonstrate to our satisfaction that you have the necessary skills and experience of running a successful pub business.) We do encourage you to take on training opportunities and can advise further on this matter. You will also need to hold a personal licence 2. Prior to signing a tenancy agreement we will require you to prepare a business plan and demonstrate that you have taken independent professional financial and legal advice. Your financial adviser should make you aware of the effect that any fluctuations in trade may have on your business plan. We will provide you with as much information as possible to help you build your business plan including: The pubs trading history in terms of barrelage and machine income and a shadow profit and loss account which will demonstrate the potential fair maintainable trade. Please bear in mind that these figures are a guide to the trading potential. We cannot guarantee such levels can be maintained in the future. 1 Pre-Entry Awareness Training (PEAT) Available electronically from the BII 2 Full details of how to obtain a personal licence are available from the licensing officer of your local authority or see 4 P a g e

5 Relevant information we have about other Timothy Taylor outlets in the area which may compete with you and any plans for those properties. We will encourage you to make your own assessment of the area and offer our opinions on other competitor outlets Potential investment opportunities in the pub you are interested in and the effect of any investment by ourselves in terms of rent. Provide the premises licence and explain any restrictions Provide cellar training prior to entry Introduce you to an existing tenant who will be able to provide support TERMS OF BUSINESS Price List: A copy of our current trade price list will be supplied with this Code together with all products available. Payment Terms: Payment to Timothy Taylor is one week in arrears by direct debit for rent and goods. Deliveries: Deliveries of tied products are made weekly. There are occasions during exceptionally busy periods when you may under order. If an additional delivery is required (slip order) you must place the order as soon as possible. This will ensure we can meet your requirements. We do reserve the right to charge for additional deliveries where we believe the system of slip orders is being abused. If you run out of a product at short notice during non delivery periods (such as weekends)/out of office hours, please contact the Tied Estate Manager in the first instance. Ingoings: - Deposit: A deposit is required; the amount is dependent upon the turnover of the business. All deposits are held in an a separate identifiable account which attracts interest and are repayable when the tenancy completes less any amounts deducted should monies be owed. - Fixtures & Fittings: Tenants fixtures and fittings are purchased on entering the tenancy. These items include most of the movable items such as carpets, curtains, furniture, light fittings, catering equipment etc. Timothy Taylor can provide loans towards the cost of fixtures and fittings. Such items depreciate in value over time and your accountant should reflect this in your annual accounts. You should also be prepared to invest in the fixtures and fittings over time to ensure their upkeep. Timothy Taylor is not responsible for dilapidated equipment. 5 P a g e

6 The value of fixtures and fittings depends upon their age and condition. The actual cost of the purchase is determined by a valuation carried out by a qualified valuer. The ingoing and outgoing tenants appoint valuers to act on their behalf. The fees for the valuation are paid by each party. In cases where there is no incoming tenant (such as a period of temporary management between tenants) the fixtures and fittings will be purchased from the outgoing tenant by Timothy Taylor. - Stock: Drink and food stocks are valued on the day of changeover and the value is determined by qualified stocktakers. The fees for this service are paid by each party. - Working Capital: It is essential that applicants have access to sufficient monies to ensure they can sustain the business during the initial period. Insurance: Timothy Taylor covers buildings insurance through a block policy. There is no recharge to the tenant. However tenants are responsible for insuring their business for items such as public and employee liability, stock, cash (including cash in leisure machines) tenant s fixtures and fittings, business interruption and personal items. Amusement Machines: Machines must be supplied by the supplier nominated by Timothy Taylor. Support in siting machines and maximising profit is available from The Tied Estate Manager and the dedicated account manager from the nominated supplier. The profit is shared on Amusement With Prize (AWP) following rent (which includes a royalty payment to Timothy Taylor) and licence fees is: AWP Tenant 50%/Timothy Taylor 50%. A royalty payment to Timothy Taylor is included in the rent. The takings from Skill With Prize machines (SWP) are split: Supplier 60%/Tenant 30%/Timothy Taylor 10% Pool tables and Juke Boxes are supplied on rent only and the tenant takes 100% of the profit. Cash collection from AWP s and SWP s is carried out by the supplier. Tenants may elect to collect their cash from pool tables and juke boxes. Flow Monitoring Equipment: Timothy Taylor does not have any flow monitoring equipment installed. However we reserve the right to do so and in the event that flow monitoring equipment is installed, we will agree a protocol for their operation to be approved by BIIBAS. As previously mentioned the tie is fundamental to the business and is monitored through cellar inspections. 6 P a g e

7 Stocktaking/Accounting: Tenants are free to choose who they wish to act on their behalf for both stocktaking and accounting. We can recommend suppliers of these professional services. It may be a requirement to share accounting information with Timothy Taylor for a specified period of time to ensure tenants are able to manage the business successfully. Where this is required this will be discussed at an early stage and noted on The Heads of Terms prior to any commitment. PUB PREMISES Premises: We will provide a detailed description of the pub premises and supply you with a copy of the full premises licence, including any conditions attached. We will also advise you if we are aware of any enforcement action taken during the previous two years and any letters of complaint. Details of any material changes in the area and how they may influence the business together with any restrictions placed on the property will be highlighted. Premises Licence: Timothy Taylor holds all The Premises Licences and will deal with any administration in respect of the licences and pay the annual fee which is not recharged. Timothy Taylor will pay for any variations but not for Temporary Event Notices. We will also coordinate any response if there are any concerns expressed by statutory authorities or if action is to be taken by such authorities in respect of the premises licence. Costs associated with such actions will normally be met by Timothy Taylor, but we do reserve the right to recharge such costs in exceptional circumstances. Tenants are required to pay for changes in Designated Premises Supervisors. This is a mandatory position the tenant (or an appropriate nominated person) must hold to operate the Premises Licence. Existing Staff: On entry to the tenancy there will be existing staff who have been employed by the previous tenant. The regulations in place governing this situation and protecting employees are called the Transfer of Undertakings (Protection of Employment) Regulations 1981 (TUPE). Prior to entry there are obligations on behalf of both the outgoing and incoming tenant in terms of the staff. Advice should be sought to ensure these obligations are met. Other Licences: Live and recorded music attract the need for other licences in the form of Performing Rights Society (PRS) and Phonographic Performances Limited (PPL) Tenants will be advised prior to entry of these requirements. If SKY TV is to be shown in the public areas the correct business package must be obtained. 7 P a g e

8 Capital Investment: Major capital investments will be planned some time in advance of commitment. Any such plans will be discussed with potential tenants prior to entry including rental implications and the level of investment required in the tenant s fixtures and fittings from the ingoing tenant. If the tenant is in situ when a potential investment is identified full involvement would be expected from the tenant in terms of planning such an investment. A full discussion would take place surrounding rental implications and investment levels required by the tenant in the fixtures and fittings would be agreed in advance of any work commencing. Minor improvements may have rental implications but this would be discussed and agreed prior to any investment. If the tenant wishes to invest he must discuss this in the first instance with the Tied Estate Manager and secure written permission. Repair Liability: Timothy Taylor is responsible for the maintenance of the pub s structure, central heating, wiring, gas and electrical installation testing and certification, drainage, car parks, external signage and lighting (excluding bulbs) and external decorations. Tenants are responsible for internal decorations and regular maintenance of their fixtures and fittings, fire risk assessments, Portable Appliance Testing (PAT), gardens/hedges, grounds and car parks must be kept weed free, clean and tidy. Dilapidations: On leaving the tenancy the tenant should leave the property in a clean, serviceable condition. Timothy Taylor does reserve the right to charge for dilapidations in cases where the premises are left in a poor state of decoration/cleanliness. This will be determined four weeks prior to the tenant s departure. If tenants do not agree with the dilapidations they can use the disputes procedure referred to in this code. Incoming tenants must satisfy themselves with the condition of the premises prior to entry. RENT ASSESSMENT Timothy Taylor & Co. Ltd. abides by the guidelines for rent assessment established by the Royal Institution of Chartered Surveyors (RICS). Fair Maintainable Trade (FMT) establishes the business potential of the pub assuming it is run by a reasonably efficient operator. The company will advertise the rent for the property (or will disclose on application) which comprises a percentage agreed between us of the potential net profit known as divisible balance. Amusement machine income is not taken into account when making this calculation. Rents are not subject to annual Retail Price Index increases. 8 P a g e

9 We will be transparent in explaining to you how we have arrived at the rent and to assist you we will provide you in writing with a shadow profit and loss account (P&L). This can only contain a range of estimated trade/costs likely to be associated with the business. Such information will include an estimate of the projected income from beer, wine, spirits and minerals, food (depending on the premises), machine income, (gross profit for tied products will be based on the tied price list), repairs & maintenance and the costs of staff wages, utilities, rates (actual) &insurance and any other costs and expenses although such costs may not be broken down further. Any information we supply is given on the understanding that this cannot represent any guarantee of trade. We will supply you with details of the volume of beer and other tied products purchased directly from the company and any other relevant information on costs which is available to us. You may request other information from us, if we cannot provide you with this information we will tell you why. We strongly advise prospective tenants and their advisers to liaise with the outgoing tenant to seek more detailed information. Benchmarking reports are also available (including a report produced by the Association of Licensed Multiple Retailers (ALMR) ) which may provide further assistance. RENEWAL PROCEDURE Our agreements up to five years do not have rent reviews and all rents are set for the period (given that there is no planned capital investment). Agreements longer than five years will have a review at the end of the fifth year. Prospective tenants are reminded that the agreements are outside the Landlord and Tenant Act 1954 and as such there is no right to renew nor is there any compensation payable. Towards the end of the tenancy we will discuss the options for renewing the tenancy including the rent if both parties are willing to continue. On setting rents and in the agreements that include a rent review the following will apply: Our tenancy agreements do not include upwards only rent review clauses. All rents are capable of upwards and downwards reviews. Rents are set prior to commencing the tenancy agreement and are for the period of the agreement, unless otherwise stated. Where agreements are in excess of five years a review will take place following five years. 9 P a g e

10 At rent review a revised shadow P&L produced by Timothy Taylor will be discussed with the tenant. Any goodwill that can be attributed to a tenant achieving a greater level of business than a reasonably efficient operator will be disregarded. Timothy Taylor is a member of the Pub Independent Rent Review Scheme (PIRRS) and in the event that a rent review dispute cannot be resolved through the company s internal procedures, tenants may elect for a referral through the PIRRS scheme This offers an accessible, independent, low cost rent review resolution service. Fees are payable by both the tenant and the landlord should the tenant wish to pursue this course of action, these are listed on the web site. Upon jointly agreeing to resolve a rent review dispute via PIRRS both parties will be required to renounce any right to arbitration or referral to original final offers by signing a deed of variation. Tenants must then contact the PIRRS administration team to request the PIRRS information pack and application form. Tenants will be asked to begin proceedings by completing their PIRRS application form and selecting their preferred independent valuer from those nominated by The PIRRS Board. DISPUTES If an agreement cannot be made between The Tied Estate Manager, Andrew Daykin ( ) and the tenant then the tenant may contact The Managing Director, Charles Dent ( ) to seek a resolution. MATERIAL CHANGES/EXCEPTIONAL CIRCUMSTANCES In the event that you believe your business has been affected by circumstances which are beyond your control (e.g. road closure, local business closure etc.) the tenant should in the first instance discuss this with The Tied Estate Manager, Andrew Daykin. If a resolution cannot be made then the tenant may contact the Managing Director, Charles Dent. 10 P a g e

11 BUSINESS SUPPORT To support our tenants we provide the following free of charge: Cask ale handling and cellar training Maintenance/replacement of cellar/beer raising equipment/cellar cooler/in line cooler Publicity and marketing support Tailor made promotions Entry on our web site and in the pub guide/rooms guide Membership of Welcome to Yorkshire Free Cask Marque Membership in year one and a 50% contribution to costs thereafter. TENANT S SUPPORT MANAGER All of our tenants will be given the opportunity for regular meetings with The Tied Estate Manager, Andrew Daykin, who has a wide experience of the trade and will provide assistance to help grow the business. If however you are not satisfied by the service you receive you may contact the Managing Director, Charles Dent, to seek resolution of any problems. RESTRICTIVE COVENANTS If the company decides to sell the freehold of the pub it retains the right to apply a restrictive covenant on the sale in accordance with the law pertaining at the time. SURRENDER OF TENANCY If the tenant wishes to quit the tenancy prior to the end of the term of the tenancy they must in the first instance discuss the matter with The Tied Estate Manager, Andrew Daykin. Timothy Taylor understands that there are instances when there is a need to exit the business prior to the end of the agreement and will assist tenants in such circumstances. DISPUTES CONCERNING THIS CODE OF PRACTICE If you believe that Timothy Taylor & Co. Ltd. has not adhered to this Code of Practice in its dealings with you and, having failed to obtain resolution having 11 P a g e

12 followed the company dispute procedure (set out above), you may contact the BIIBAS ( who may use their good offices to ensure, as far as possible, that there are no misunderstandings or personality issues that have prevented a more fruitful dialogue between us. AMENDMENTS TO THIS CODE Any amendments to this code will be agreed with BIIBAS before implementation. 12 P a g e

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