Written evidence submitted by Stephen
I write as an individual, regarding my experiences
with the Tied Business Model as operated in my case, by Enterprise
Inns plc, up until March 2007 the time of my Lease surrender followed
by personal bankruptcy; my submission to the Inquiry and subsequent
treatment as an "individual case" and the Supplementary
Memorandum from Enterprise Inns plc August 2009.
As an individual, with little direct experience of
the workings of "Committee", may I first say how difficult
it is, not to be intimidated by the process of submission. No
doubt, the use of on-line access has brought the workings of "Committee"
to a wider audience and, for that, us poor complainants must be
As a Personal License Holder with some 35-plus years
experience in the hotel & catering trade, I can hardly be
described as a "newcomer". My interest in the Inquiry
into Pub Companies goes back to 2005. Having followed press reporting
and being into my fourth year of tied-leasing and experiencing
the difficulties brought about in trying to make or run a profitable
business; I really needed to learn if anything could be done to
redress the balance.
Having just disposed of one of two Tied-lease premises
at a loss of some £60,000, I was able to turn my full attention
to my original project, a town centre premises in a South Wales
coastal town. After four or five years in the premises, I had
brought a previously closed and run-down pub, to be the leading
"independent" in the town with a turnover in excess
of £10,000 weekly. The real difficulty was in making a net
profit out of that £10,000 - given the constraints imposed
by the greed of the Pub Company and the late-discovered anomaly
that is the "divisible split" in profit.
At the time, I complained about a lack of input from
the "BDM" - the area manager charged with helping me
build a bigger better business. Four changes of BDM in as many
years, made absolutely no difference to the "support"
I received - it was still nil.
Working 100-plus hours per week and paying a host
of "expert" lawyers, accountants and stock-takers to
deal with a range of problems, belied the fact that the Tied-lease
system as operated by the likes of Enterprise Inns is inherently
weighted against the tenant/lessee. They continue to get away
with this unfairness because of their duplicity. They know little
about the practical aspect of running a pub business but they
get coaching in how to obfuscate, and deal with Committee questioning.
They appear to be expert only in re-letting property - the Churn.
Following my submission to the BESC in 2008, I was
one of a number of selected cases to be dealt with on an individual
basis, at the suggestion of the then Chairman.
It is the response of Enterprise inns (by way of
Supplementary memorandum) ref: www.publications.parliament.uk/pa/cm200809/cmselect/cmberr/26/26we18.htm
with which, I wish to take issue.
claimed I sought to re-invent circumstances and blame them entirely
for my financial situation:
was no re-invention on my part - merely the fact that for five
or six years, in the absence of any support or assistance from
the so-called BDM, I had sought to deal almost entirely alone
with problems of a long-standing nature, of which they were totally
aware. They were happy to let me do so - in the certain knowledge
that I would fail. The only reason I was in debt to HMR&C
was because, under financial pressure from the Pub Company, I
had on a number of occasions used receipts of VAT payment to assist
my cash-flow. On one occasion I had owed the VAT £28,000
whilst Enterprise were in credit - I recovered from that position
but was unable to do so in 2006-7 due to the extent of my capital
expenditure on THEIR premises, combined with their inactivity
in relation to the upcoming Ban on Smoking.
inns, with no knowledge or investigation, glibly claim that I
failed to resolve a four year dispute which led to HMR&C petitioning
for bankruptcy: Their "knowledge" of a four year dispute
is based on my conversation with a Regional Manager in which I
mentioned a long, drawn-out "routine inquiry" into my
tax affairs pre-dating my business arrangements with Enterprise.
However, had Enterprise been good enough to provide me with a
cheque for £10,000 (of a volume-related discount of £13,000
which was due to me at the time) I could have settled 50% of that
liability in an instant. Seemingly, the worst mistake I made was
"not to raise concerns or complaints in relation to the profitability
of the three sites he occupied..." Well, of course I raised
concerns - I raised them with each of the BDM's, I raised them
with Head Office personnel when I attended the "Pub of the
Year" award ceremony - as a Finalist. I raised the issue
with Mr Tuppen CEO and with other Board members - from whom I
received NO reply.
claim my submission is "littered with fabrications and innuendo,
none of which is supported by the documentary evidence (they)
have." They do not challenge a single line of my submission
- they merely seek to dismiss it. They do not have an answer to
most of the points raised, that will not incriminate them and
their tawdry business practices.
matters handled by administrators acting on behalf of...":
Yet another supposition by the anonymous respondent from Enterprise
Inns. As far as I am aware, Enterprise did not make a claim via
the Official Receiver for "monies owed" by me. It was
seventeen months later that I discovered what those "monies"
could be. I had visited the offices of Enterprise Inns to enquire
whether the derisory sum of £13,000 for my fixtures and fittings
had indeed been paid to the Receiver. I say "derisory"
- I had not long completed a ground floor refurbishment of the
premises costing me in excess of £30,000.
majority of that investment was "claimed" by Enterprise
as "Landlord's fittings" - the installation of fixed
seating, new and matched skirting boards, wall-boarding and fitted
glass shelves throughout, new flooring and bar-fronts and a hand-built
fire-surround in matching Welsh oak. All fitted with the knowledge
and "support" of the BDM who failed to point out that
such a refurbishment would not form part of saleable F&F!
What I learned on that Head Office visit, was that Enterprise
had issued a Dodgy Dilapidations Dossier - effectively wiping-out
my minimal credit position and keeping everything, but everything,
for themselves. It's what they do. It's how they earn extra revenue.
They drive their tenants into the ground with high rents and even
higher tied- beer prices; they insist that the tenant's repairing
obligations are met but often fail to attend to their own historic
responsibilities and then to add insult to injury, they profit
from the Churn, constantly charging and re-charging for Dilapidations,
of which they fail to attend.
"...scurrilous and entirely false insinuation in relation
to the fire..." seem like hollow words now. The fact that
"...all statutory compliance certificates were in place at
the time.." are not borne out by the fact that Enterprise
inns were fined £15,000 plus £7,500 costs in a prosecution
brought by the Vale of Glamorgan Council: http://www.morningadvertiser.co.uk/forum.ma/thread-for-post/79311
for two offences in relation to breaches of Health & Safety
regulations concerning compliance testing. It was patently NOT
in place, at the time they claimed. The story about "an unattended
chip-pan" was a complete fabrication on their part. The tenant,
who was severely injured in that event both physically and psychologically,
lurched from disaster to further disaster in a very sad turn of
events - but Enterprise would claim that they bore no responsibility
for that, either. The pertinent fact is that Enterprise were fully
aware of the shortcomings in relation to the missing compliance
certificates - because they sought to charge me for that requirement
at the time of their Dodgy Dilapidations report. These Company
"representatives" are merely playing a game with you.
They are as dishonest in their dealings with the Committee as
they are with their tenants and lessees - and they use colourful
language and seemingly compliant turns of phrase to hoodwink anyone
who dares to question their ethic.
an effort to dispel the myth of "Churn", their response
to my claim of licensee changes is to refer to "failed substantive
agreement". That is patently rubbish. It does not provide
for the fact that in their desperation to keep open a failing
house, they will recruit anyone who has the slightest chance of
temporary success - and a line of credit. Deposits are taken and
lost. F&F are sold or rented at the highest possible price
and re-taken for nothing. Dilapidations are filed against the
out-going tenant and not acted upon.
I am incensed, that a further four years on we are
no nearer to ridding this once great industry of the parasite
Pub Companies who bring nothing to the party - other than a desire
to reduce their ludicrous levels of financing and to increase
their individual earnings.
The so-called Code of Practice obviously requires
just that - lots more practice. The headlines will show a handful
of "successful" cases where parts of the Code have been
implemented. The reality is such, for the majority of tied tenants
that absolutely nothing has changed. I receive emails on a regular
basis from struggling tenants, having read of my experiences,
looking for help or guidance on how to deal with their particular
In most cases I can only offer cold comfort - they
are bounded by compliance requirements from so many statutory
and regulatory bodies - and working all the hours under the sun
in an effort to stay afloat, the last thing they need is a complicated
battle on contractual issues with their rapacious landlord.
The reality is, most people just give up quietly.
They take the view that the Pub Company cannot be beaten and,
more concerned about where they might live next and keeping their
partner/spouse/family together, they just give up. A sad indictment
of a once thriving trade, decimated by the out of control actions
of a very few all-powerful Pub Companies.
I sincerely hope, in line with the previous Committee's
leadership under Peter Luff MP, that the recommendation of this
Committee will be the referral of the entire workings of the leased
and tenanted pub market, to the Competition Commission. From the
so-called claim of low-cost entry, to the ludicrously expensive
supply of tied products together with supplier discounts paid
only to the Pub Company (for purchases by individual pubs), and
the wholly unfair share of machine incomes and arbitrary use of
Dilapidations schedules; the Pub Companies (as opposed to brewers)
should be found to be unfit for purpose.