Written evidence submitted by Greene King
Pub Partners
Greene King Pub Partners is the leased and tenanted
pub division of Greene King plc, the national pub operator and
brewer. It has a core division of 1,000 tenanted and leased pubs
and a further 300 pubs within its Independence division. Recent
research released by HIM research and consulting questioned 100
Pub Partners licensees alongside the same from Punch, Admiral
Taverns, Marston's and SNPE. Greene King were top when supporting
current tenants on advising on driving food sales, the training
offered to them, information and advice provided, promotions,
the pubco's website and joint top for clarity of the contract.
HIM has written to Greene King to announce the label of 2011 Tenant
Track Pub Co of the Year can be used for the company if wished.
The following is the evidence submission for Pub
Partners and the pubs represented in its core estate.
EXECUTIVE SUMMARY
— Greene
King is committed to operating its tenanted and leased estate
to the highest standards and received accreditation of its new
Code of Practice (COP) from the BII in June 2010. This COP has
been developed to support its licensees on tied tenancy and leased
agreements, it goes above and beyond the minimum requirements
outlined in the BBPA framework code and it builds on previous
company COPs.
— COP
compliance is imperative to Greene King and its licensees' success.
A number of rigorous systems and ways of working have also been
introduced into the business to ensure compliance, alongside an
initial six day training programme for all business development
managers (BDMs). This COP and ways of working training are now
integral parts of the Greene King Induction Programme for new
BDMs.
— The
Greene King COP commits to providing licensees with total transparency
of information provided throughout the entire letting process
and operating agreements.
— Greene
King has invested in a new IT infrastructure which ensures a consistent
approach to the review of rents in association with fair maintainable
trade and overheads Profit & Loss (P&L) models, which
are provided to licensees as part of the rent review/pub letting
processes. The rent models follow the RICS guidelines and we operate
a rent panel to ensure a consistent approach to rent setting and
compliance across the estate.
— Greene
King strongly believes that failure to enforce its COP would seriously
affect its ability to operate the business or recruit good quality
licensees. Greene King has worked closely with the BII through
the COP accreditation process and believes that the BII is the
appropriate organisation to effectively and independently ensure
that pub operators comply with their COP commitments. A statutory
COP is unnecessary and would only add to the already significant
amount of "red tape" licensees have to deal with.
— Through
the addition of the new BII PEAT licensee training course, and
alongside the existing Greene King training programmes, Greene
King fully supports the BII guidance. This has been developed
in a clear way to provide new licensees with sufficient information
when taking on a tenancy or lease agreement. In addition, Greene
King has introduced further compulsory training programmes for
both licensees and BDMs.
— Greene
King's COP provides a firm commitment to more business support
for licensees and greater clarity of information. For example,
improvements in flow monitoring equipment clear processes have
been introduced should a potential breach of a tie be found.
— Licensees
can choose a free of tie machine option on new tenancy and lease
agreements with Greene King. AWP Machines that are tied are not
included in the licensee's rental assessments.
— Greene
King is both a brewer and pub operator and firmly believes that
any freedom of tie is considered on a pub by pub basis. As such,
free of tie and guest ale provisions already exist within the
estate. Any enforcement of a totally free of tie provision would
result in a loss of licensee support which is an integral part
of the Greene King tied agreement.
SUBMISSION
1. Greene King's COP, submitted to this committee
in October 2010, has been developed to exceed the de-minimus requirements
of the BBPA's framework code. It includes extra elements to ensure
that Greene King's licensees have a fair, transparent and profitable
relationship with Greene King. Additional aspects include:
1.1 All BDMs will have participated in an exclusive
Post Graduate Diploma in Multi Site Retailing with Birmingham
City Business School. This will ensure that Greene King's BDMs
provide the best and most relevant support throughout the agreement
term with their licensees.
1.2 An Annual Business Review (ABR) has been
launched which is a detailed, full review of an individual business
on top of the regular business reviews licensees receive. The
ABR is conducted around the annual anniversary of the agreement
and looks at all aspects and opportunities for the business against
the licensee's business plan. The review also ensures that all
health and safety aspects of the business are complied with.
1.3 Mandatory Training for all new licensees
before they take on a Greene King pub includes our "Go for
Growth" induction course, a finance course and a cellar management
course. The "Go for Growth" course sets out the business
plan against the break even point, marketing and offer for the
new licensees for their particular pub, while the finance course
covers all areas of financial management of the business. Greene
King will reimburse the cost of these courses when the term of
the agreement has been completed or following three years if the
agreement is longer.
1.4 Greene King will not allow any new prospective
licensee exemption from the BII Pre Entry Awareness Training,
irrespective of experience. This, alongside the mandatory training,
provides a strong foundation before entering a pub with Greene
King.
1.5 Greene King has introduced new IT systems
to ensure that all new licensees are provided with a transparent
summary of the entry information required under the framework
code so that this information can easily be provided to an independent
professional advisor in one document.
1.6 Greene King has developed a full and detailed
range of guides to support its licensees throughout their agreement.
These guides have been endorsed by BIIBAS and include:
— Guide
to Moving In.
— Guide
to Maintenance & Service.
— Guide
to Leaving.
— Guide
to Buying a Lease.
— Guide
to Selling a Lease.
— Guide
to Purchasing Obligations.
— Guide
to Insurance.
1.7 Greene King has developed a fully integrated
and IT based rent centre which enables a detailed Profit &
Loss account relating to each pub to be provided to every licensee.
This is a commitment within the Greene King COP. The rent centre
has been developed within the RICS guidelines for pub rental valuations.
2. COP compliance—Greene King initially
trained all BDMs within its business over a six day programme
in September 2010 to ensure that the COP ways of working were
fully understood and complied with. This training together with
the new IT systems ensure a consistent approach to information
provided to all licensees before going into a pub eg entry information
requirements, P&L transparency, mandatory training conducted,
independent professional advice gained and COP briefed is all
recorded centrally. The BDM induction programme has been updated
to cover all aspects of the new COP and ways of working which
is undertaken before commencement of role.
2.1 Licensees received a visit from their BDM
to brief in the new Greene King COP to ensure that all pubs were
fully aware of the ways of working between both parties.
2.2 The rent centre has been developed to ensure
that all licensees' rent reviews and end of agreements are processed
in a formal and transparent manner within the COP.
2.3 All Rents and FMT P&L models are signed-off
by a central rent panel, which includes RICS qualified Estate
Managers, which ensure they are compliant with the COP and RICS
guidelines.
3. Enforceability of the COP—IT systems
have been enhanced to ensure compliance alongside an extensive
programme of training for BDMs.
4. AWP machines—Some agreements within
Greene King are tied on AWP machines and some are not. For those
that have chosen a tied agreement on machines, full details of
rental is provided and the machine income is not included in the
rental calculations.
4.1 For free of tie AWP agreement, any machine
income will be included in the licensee's rental calculations.
4.2 Greene King works with the very best suppliers
of AWP machines providing the licensee with better quality packages
than they may be able to attain themselves. Greene King's machine
manager provides licensees with advice on the best way to maximise
machine income.
5. Flow monitoring equipment is used by the majority
of Greene King licensees. In order that they can maximise the
benefits of these systems the licensees have been provided with
an easy to use reporting system and guide. When flow monitoring
equipment has identified a potential breach of the purchasing
obligations by a licensee, Greene King now provides at least one
other piece of evidence to confirm any claim. In agreement with
the BIIBAS committee considering Greene King's COP, there has
been a 14 day appeal process introduced where a licensee is able
to provide any evidence to the contrary of Greene King's. This
also allows the licensee to seek professional advice and attend
a meeting with their advisor and a Greene King representative
should they wish to do so.
6. Complaints procedure—Greene King's complaints
procedure for its licensees is clearly outlined within the COP.
6.1 The new IT central system records when a
complaint has been received by a licensee and the actions required.
6.2 Greene King also fully details the complaints
procedure for rental disagreements eg. PIRRS and arbitration,
and has endorsed the use of PIRRS when appropriate. Greene King
has also recently taken advantage of the mediation services provided
by the BII to ensure that a dispute with a licensee was amicably
resolved for both parties with the help of a BII independent mediator.
7. Availability of free of tie options—as
a vertically integrated pub operator and brewer, Greene King believes
the tied agreement is a fundamental part of its offer to licensees
wishing to take a pub with the company.
8. Greene King is a vertically integrated brewing
and pub business with the majority of the leased and tenanted
estate tied on draught beers and an increasing number being free
of tie on wines, spirits and minerals (68%). Greene King currently
has 24 pubs which are fully free of tie.
8.1 The level of tie is based on the most appropriate
agreement for the pub and the individual licensee's business plan.
Of 574 Greene King licensees independently surveyed last year,
92% said the tied agreement with Greene King provided value to
them. 64% chose the tied agreement because of the low cost of
entry, 70% valued the business advice provided by their BDM, 63%
valued the training Greene King provided, 59% valued the association
with the Greene King brand and 74% liked that Greene King's agreement
offered a free of tie option on some products. Only 33% wanted
a guest/local ale provision and 24% wanted to be free of tie on
AWP.
8.2 These survey results show that the majority
of licensees value and are happy with what the Greene King tied
agreements offer. Greene King remains convinced that any enforcement
of a free of tie option across the estate would significantly
impact the financial viability of a large number of pubs through
the loss of Greene King licensee support which the tied model
provides.
9. BII Guidance—Greene King fully supports
the guidance provided by the BII on different agreements and different
models available, provided through their BII PEAT course. All
new licensees taking a pub with Greene King must complete the
PEAT course irrelevant of experience.
10. Licensee Involvement:
10.1 Greene King developed and implemented its
new COP in conjunction with its Licensees Forum which is comprised
of independently elected licensees.
10.2 A quarterly independent licensee survey
has been conducted over three quarters since the launch of the
COP last year. This survey gathers feedback from Greene King's
licensees as to the standard of support and service they receive
from their BDMs and the head office support teams. The results
form part of the BDMs performance management programme.
20 June 2011
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