Annex 14a
THE RETAIL PARTNERSHIP AGREEMENT SUMMARY
The new Retail Partnership Agreement (RPA) is
the first in the market to offer true flexibility to licensees.
The RPA allows licensees to enjoy the benefit
of the value that they create in a pub business without the risk
of being locked into an unsustainable deal.
It has been produced following extensive consultation
with our customers and uses a modular approach to create the right
deal for the right pub.
Licensees can sign up for an initial term of
between five and 25 years, in five year blocks. However short
the initial term, the licensee can elect to extend their agreement
to up to 25 years at any time. This will provide them with the
security they need to invest in the business and ensure they can
optimise the value of the lease on assignment.
The RPA retains Enterprise Inns' ground breaking
cooling off period, allowing the licensee to walk away from the
deal at any time during the first month of the term. Moreover
they may give six months notice within an initial 90 day "cooling
off period", and terminate the agreement without penalty.[28]
Consultation with existing licensees has confirmed
the three most important elements of the deal are rent, drinks
prices and repair liability. And these have all been addressed
in the package.
Whatever the length of the term, the licensee's
repair liability is limited to items of a non-structural nature.
Enterprise Inns retains responsibility for the main structure
of the property and, unlike other pub tenancies, their specific
responsibilities are detailed in the agreement.
Enterprise Inns offers two discount packages
with discount of up to £100 per barrel of beer. This enables
licensee to choose the deal that best suits them and to trade
off rent against discount where it is appropriate for the business.
There is no minimum purchase obligation and the structure of the
discount packages enables licensees to enjoy much greater rewards
for growing the business than traditional discount schemes.
Whilst the RPA does include a full tie for all
drinks, Enterprise Inns is prepared to negotiate for the release
of the tie on wines, spirits and minerals.
Enterprise Inns pioneered the introduction of
rent reviews that can go down as well as up. This remains a feature
of the RPA and the rent will move to market value at review, even
if that is below the level of rent currently passing.
The value of any improvements carried out by
the licensee is excluded from the rent review and, in the unlikely
event that we are unable to agree the review with the licensee,
the matter may be determined by an independent third party.
In line with the industry norm, income from
AWP/SWP machines is split 50/50 between the licensee and Enterprise
Inns. The licensee retains 90% of the income from all other machines.
The RPA enjoys the full protection of Part II
of the Landlord & Tenant Act 1954[29]
and in most cases the licensee will have the right to renew the
agreement at the end of the initial term. Enterprise Inns recognises
its responsibility as the UK's leading pub company and the RPA
requires licensees to run each pub in a responsible manner, having
regard to the Portman Group's guidelines.
28 The licensee must have complied with all terms
of the lease. The break clause may not be exercised after an assignment. Back
29
In certain cases it may be necessary to exclude this, eg where
the terms of a head lease require it. Back
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