Memorandum submitted by Camelot Inns
We are a multiple PubCo running seven units
in, mainly, the Hertfordshire area.
We have been in business for 15 years and employ
approximately 50 people across a variety of Public Houses.
I am writing to raise awareness of issues arising
from our trading arrangements with a number of the major Pub Companies,
namely in direct dealings with Enterprise Inns, Punch Pubs and
Admiral Taverns. I am sure you will receive a number of submissions
concerning the blatant unfairness of High rents and High `tied'
beer prices, a process that has been abused by the Pub Companies
before and after last Select Committee enquiry in 2004 and continues
to be the major cause of the demise of a great British attraction—The
Traditional Pub.
I wish, however, to concentrate on one of the
strongest recommendations of the TISC inquiry, namely that the
nominated tie of gaming and amusement machines should be ceased
immediately. The pubco retailers took no notice of this recommendation
and continue to not only approve and nominate suppliers of their
choice but also to receive from those suppliers the payment of
substantial royalties and/or a share of the income derived from
machines as a prerequisite of acceptance of those suppliers gaining
admission to their estates.
The above royalties paid to the pubcos are concealed
within the machine rentals charged by the supplier so in very
many cases the unwitting tenant is unaware of how much income
is derived and paid over to the pubco from the income of their
machines.
I consider that this prevailing situation is
an anti-competitive, iniquitous, baronial and feudal practice.
Tenants sign their lease in the knowledge of the supply clause
but through force majeure of the large pubco retailers holding
so many thousands of pubs throughout the UK, what real choice
do they have if they wish to run their own business as tenants
of a pub?
The pubco "retail agreements" or Leases
as they should be known, are, as far as I am aware, the only landlords
and tenants lease agreements in existence that tie in the supply
of non-core products, ie gaming and amusement machines. It is
important to note that these Agreements are not franchises—they
are the basis for self employed business people to have the freedom
to run a Pub business. The might and strength of the predominant
pubco retailers has, however,set this unreasonable practice—and
other "hidden ties" as the norm.
I believe it is essential in the interests of
free competitive supply, freedom of choice for the tenant, and,
ultimately benefit to the consumer who is the client base of the
pub that the above practice exercised by the pubco retailers is
ceased.
I am enclosing some figures using actual numbers
from our mix of "Free" and "Tied" Pubs to
show the impact on a Pubco retailer of these "hidden rents".
PUBCO MACHINE
SHARE ARRANGEMENTS
The Pubcos claim to offer `machine management
services' and tie their tenants into a list of "nominated
suppliers". To be a nominated supplier you have to agree
to pay a royalty, per machine, upfront to the Pubco. This royalty
is added to the machine rents and deducted before the tenant/lessee
receives his share.
The royalty payment varies from Pubco to Pubco
and indeed from machine type.
There is no transparency here—but a typical
royalty would be £30 per AWP (fruit machine) per week.
Multiply this by the thousands of AWPs in the
Pubco estates and there is a massive "hidden" payment
involved.
The Pubcos say this is 50/50 share agreement.
There follows an example from one of our Public Houses.
Pub "A" with three Fruit Machines
and a Pool Table. Weekly Collection
| Tenant Dealing Direct with Gaming Supplier
| Machines Supplied via Pub Co "nominated" Supplier List
|
| Gross Cash in Box | 717.40 |
717.40 |
| Less Rent | 183.00 | 275.00
|
| Nett Cash after Rent | 534.40
| 442.40 |
| Tenant Lessee | 534.40 |
221.20 |
| Pubco Share | | 221.20
|
| Pubco Royalty | | 92.00
|
| |
|
Totals per annum; Based on this one unit.
Tenant "free" of Pubco tie receives £27,780.
Tenant "tied" to nominated list receives £11,500.
Pubco total from share/royalty £16,280.
| 
