The hard way

Licensees and would-be publicans are becoming increasingly aware of rogue pub placement companies, thanks to The Publican's ongoing investigation. Michelle Perrett reports.

For someone wanting to get into the pub trade, an advert in a national newspaper offering you the pub of your dreams for £5,000 seems an ideal way in. It may just be too good to be true, however, as many hundreds of potential licensees have found out to their cost, after being ripped off by companies which offer training and the promise of a pub placement. And £5,000 is a lot to pay for what often amounts to insufficient training and a dodgy boozer.

An exclusive Publican investigation into these firms has found a web of inter-related companies and people who have been involved at every level.

These companies are knowingly taking advantage of potential licensees and believe that they can get away with it. They advertise nationally, targeting unsuspecting individuals with the promise of a partnership agreement. As they outline their convincing spiel to the would-be licensees they smile and promise, take any amount of money up to £7,000, jump into their flash cars, bought with the hard-earned cash of these potential licensees, and drive off into the distance laughing all the way to the bank.

In at the deep end​

So what does the would-be licensee see for his £5,000? Well, the majority of these new entrants are given their basic National Certificate for Licensees through an approved trainer.

But then the reality sets in - many of these people claim they have not been placed in a pub at all and, when they are, it is often not the sort of pub they were promised.

Some licensees claim they have been placed in pubs with serious problems, ranging from drug dealing to health and safety issues, and the training they have received is insufficient to enable them to deal with such sites. But when they complain to the company, they say they are bullied and told that if they are not happy, they should leave.

Those who are given a pub placement are often brought in on partnership agreements, which for many simply mean a tenancy-at-will - from which they can be removed at any time. In these deals the licensee is told they are self-employed and offered something in the region of 15 per cent of the wet sales as salary. However, the licensee is expected to pay staff and use that remaining money to build the business as well.

These rogue companies often say that they will pay for rent, beer and utilities - but calls to The Publican have revealed that this is not always the case. Some licensees in partnership agreements have suddenly found themselves with no gas or electricity, or no beer. It is hard to generate an income out of wet sales if you have no beer to serve.

Different name, same deal​

When enough people become suspicious about these companies, they simply wind themselves up. Those involved then set up again somewhere else with a new company name and new directors. Many list themselves with Companies House as "labour recruiters" or, ambiguously, under "other business activities".

These operators are so convinced they are beyond the law that they are quite blatant in their activities. Simon Robinson, a chef based in York, lost £5,000 to Greyfriars Taverns last November. Some time later he received a letter from another company offering a similar deal. Curious, he went to the presentation - it took place at the same pub in Knaresborough where he first met with Greyfriars - only to find the same person again running a presentation for this new company on how to get into the pub trade. Mr Robinson said: "All the spiel was the same, down to the pictures in the office of random pubs. They used to have the Greyfriars logo on them and they had simply taken it off and replaced it with their own."

Forced into administration​

But it's not all bad news. Customs & Excise forced Barber Lettings - the parent company of Greyfriars Taverns - into administration in February after it failed to register for VAT.

But so concerned were the officials involved that they petitioned the court for a provisional liquidator to protect the assets. They are also continuing to investigate its relations with a raft of similar placement and training companies.

The investigation unit at the Department of Trade & Industry - renamed the Department for Productivity, Energy & Industry (DPEI) after the election - has confirmed it has its eye on a number of people still operating, and is particularly keen to get its hands on some of these shady characters. It has confirmed that any pubcos who lease pubs to these companies could also find themselves under scrutiny.

The BII has also been targeting these companies, outraged at their blatant disregard for the trade, and it was forced to launch legal action against some firms using its logo without permission.

What is very concerning, however, is the role of pubcos in all this. They have been leasing their pubs to these unscrupulous operators, who break the terms of their agreements and sublet the pubs to their unfortunate victims.

There may be the occasion when the business development manager is not aware that this is going on in the company's pubs. But what is ridiculous is that these rogue firms can - and do - take pubs on from the large national pub companies, put in untrained people to run the sites and get away with it.

Many reputable pubcos and brewers have contacted The Publican offering assurances that they do not lease pubs to these operators and have promised not to do so in the future. But there are a number of operators out there which continue to lease large numbers of pubs to these people.

One insider, speaking exclusively to The Publican, says many of the pubcos whose fingers were burnt by Greyfriars Taverns have since leased some pubs back to the people involved.

Licensee 'left in limbo'​

Paul St. John-Campbell paid Greyfriars Taverns £4,000 in 2002 and was placed in the Queen Edith pub in Cambridge.

He lives in the pub with his wife and three children. When he moved in he was forced to invest several thousands of pounds in the kitchen, as well as other parts of the business, to get the place up and running.

Now Mr St. John-Campbell is unsure of his position as the pub is in the hands of liquidators. He is continuing to run the pub, which is owned by Punch Taverns, while a decision is made about his future. But he says the lease is now worthless and he has lost all of his investment. He said: "I've been left in limbo and I want to warn anyone else getting involved with these Mickey Mouse companies."

Punch Taverns said: "We sympathise with Paul's predicament and have been in regular contact to keep him updated on the situation. However, we are in ongoing discussions with the administrators, who are managing the pub, to secure it back to Punch."

Timetable of The Publican campaign​

• August 26, 2004:​ Would-be licensees are left thousands of pounds out of pocket as training companies fail to deliver. The Publican goes undercover to find out what one of these companies is offering potential licensees. Click here.

September 2, 2004:​ Licensees call on the government to stop recruitment companies from failing to live up to their promises. Click here.

September 08, 2004:​ Pubcos pledge not to use recruitment firms. Click here.

October 14, 2004:​ The Publican campaign to stamp out rogue recruitment companies receives a boost when national news