Open-book accounting at Marston's
Marston's Pub Company is to introduce open-book ac-counting as part of its re-sponse to the Trade & Industry Select Committee inquiry into pub company power.
The move is part of a raft of greater support for licensees from Marston's, as well as more flexibility and choice in lease agreements and clearer guidelines in terms of rent policy, repair agreements and beer discounts.
The adoption of open-book accounting will see all new licensees, even those taking assigned leases, required to work with a specialist firm of accountants in their first year, with Marston's being warned by the accountants if problems arise.
This approach has improved survival rates for new licensees at Greene King where failure rates in the first year of business have dropped from around 30% to 8%.
Marston's has been trialling the move at around 30 pubs it transferred from managed to tenanted in the past year. The company will make a contribution of £600 to the £2,000 cost of a year's support from the accountants.
Marketing & development director Andrew Cooney said: "We recognise the challenges that licensees face - especially during the first 12 months - and accept our role in helping to make sure that from a commercial perspective each pub business is financially sound and has the ability to build a sustainable future."
Other innovations include compulsory training courses for new licensees, an explicit commitment to abandonment of upward-only rent review clauses and the introduction of a three-month cooling-off period for new licensees.
Another new element includes greater flexibility with the period of the lease, which, rather than simply being for 21 years, will now be offered at between 10 to 30 years, increasing in blocks of five. There's also a simpler beer discount scheme, which gives £50 per barrel on sales over an achievable target being introduced.
Licensees will also be required to set up a savings fund of between £2,000 and £4,000 a year as part of their agreement, which means money will be collected fortnightly with rent to ensure there is sufficient cash to cover the cost of decorations and minor repairs. Licensees will earn interest on the fund.
Cooney added: "We are not prepared to compromise on quality standards. This means we need to ensure that our pubs are first class and that our licensees have the support and training they need to meet the challenges head on."
