Enterprise Inns to drop restrictive covenants

Enterprise Inns has vowed to ditch restrictive covenants that prevent pubs being used as licensed premises when sold off.

The move is one in a series of measures the company has come up with in response to the Business and Enterprise Committee (BEC) report which was highly critical of the relationship between pubcos and licensees.

During evidence sessions Enterprise Inns chief executive Ted Tuppen defended 'restrictive covenants' on the basis that having too many pubs in one area can make it tougher for those that remain to compete.

However the company has now followed Punch Taverns in removing restrictive covenants from pub sales.

The other commitments, which have been sent to Business Secretary Lord Mandelson, include reform of tie deals, and providing better support and discounts for tenants.

Lord Mandelson must decide whether to refer the BEC report to the Competition Commission for further investigation.

But in a statement Enterprise said this would be a "waste of taxpayers money"

The statement said: "Enterprise Inns believes that any further investigation into the beer and pub market would not be in the best interests of either the pub industry or the general public.

"It would cause damaging uncertainty at a critical time for investment and employment in the industry and be a waste of taxpayers money."

The statement then goes on to outline the 13 areas of reform that Enterprise is committed to, this includes:

• Not imposing restrictive covenants preventing the continuing use of premises for licensed purposes

• Providing funding for an independent representative body for licensees

• Committing to "full disclosure of the assumptions underlying the assessment of operating profit for pubs at the time of letting

• Not allowing licensees to enter a binding lease without a business plan, which must be signed off by a qualified trade accountant, Enterprise and the licensee

• Revising its own Code of Practice

• Offering discounts of up to £150 per barrel to licensees entering agreements

• Offering "royalties free" AWP agreements, but continuing with full tie for gaming machines

• Supporting BII initiatives to provide training and qualification schemes for Business Development Managers