JW looks after 'his mates'
JW Lees offers a 'cooling-off' scheme for new licensees. Michelle Perett takes a closer look at the agreement.
Many licensees will know of regional brewer JW Lees through advertising for its bitter "John Willie to his mates". The brewer has 152 pubs mostly in the North West - 126 of those are tenanted with 18 on its new tenancy agreement.
The brewer updated its traditional tenancy agreement by giving licensees a chance to think again before they take the plunge. It has introduced a three month "cooling off" period giving licensees an "easy exit" clause. It can then be renewed on a three yearly basis. It was put together in consultation with its tenant forum and endorsed by trade commentator and former BII director Phil Dixon.
Mark Welch, operations manager for JW Lees, says: "People need more security and we think three years is an appropriate period, then we can just roll the agreement on for another three. This new agreement is part of our commitment to the licensee - significant advantages are low-cost entry and an easy exit option, which makes the agreement exceptionally user friendly."
The regional brewer says that with a deposit - and purchase of fixtures and fittings, licensees can be in their pub for as little as £12,000.
JW Lees offers a discount scheme for its new licensees - Mark says it is because they want to be sympathetic to how the business grows over those first years.
For example, a pub with a £12,000-a-year rent would pay £10,000 in the first year, £11,000 in the second and would not be paying the full rent until year three.
However, it is not all bad news for a good licensee who does not have the capital to take on a tenancy in one of their sites.
"For a good licensee that has not got the finance we have a good support package and for those new to the industry - we will try to give them as much training and help from more experienced licensees,"adds Mark.
All the major pub companies are fighting to recruit the best and most experienced licensees. JW Lees believes that there needs to be more recruits from outside the trade.
Mark says: "We have got to look at new people - the old source of new tenants was redundancy money. It's more complicated now and there is more legislation. You have to give tenants more support.
"As a family business we believe in open dealings with all our tenants - we want to work in partnership with them. There will be a full disclosure before any pub is let and at the end of three months there will be a formal review with every new licensee to ensure both parties are happy," he adds.
The issue of beer sales and rent is currently very topical following the case of Crehan v Inntrepreneur and the parliamentary investigation. As a regional brewer JW Lees believes that the way to make profits for both itself and the licensee is to increase beer sales.
Mark says its rents are "significantly" below those of the national pub companies. "We are about growing a long term business," he says. "If we sell more, we make more and if the licensee suffers, so do we."
"While there is a move in the trade to tie tenants down into long-term leases, we believe that this is not appropriate for all sites. A modern three-year agreement can often be a more attractive option - from the tenant's point of view this provides a desirable flexibility and minimises investment risk," he says.
The three-year agreement also offers a "dilapidation scheme" which encourages tenants to save up and invest in their pub.
Licensee Philip Marlour of the Albion Inn, Hollinwood was one of the first to sign up to the new agreement.
"It's fair and above board," he says. "There are no hidden clauses. It's good to see a brewery that's prepared to work with licensees rather than just look after their own interests".
Pictured: Philip Marlour of the Albion Inn, Hollinwood signs the new tenancy agreement in the presence of JW Lees managing director Williams Lees Jones (left) and operations manager Mark Welch (right)
