The Pubs Code etc. Regulations 2016

A sustainable business plan

10.—(1) Before a pub-owning business—

(a) enters into a new agreement with a tied pub tenant; or

(b) agrees, with a tied pub tenant, the renewal of a tenancy which is not a protected 1954 Act tenancy,

the pub-owning business must ensure that the tenant has a sustainable business plan.

(2) A “sustainable business plan” is a business plan which—

(a) has been prepared following consideration of independent professional advice, such as business, legal, property and rental valuation advice;

(b) includes financial forecasts for the tenancy or licence period, including—

(i) estimates of income and expenditure;

(ii) a sensitivity analysis;

(iii) the impact of any indexation of rent or of other costs referred to in the new agreement or in the renewal; and

(c) contains a forecast of the income and net profit over the tenancy or licence period which, in the pub-owning business’s opinion, is reasonable for the tenant and realistic.

(3) The pub-owning business must, before the tied pub tenant prepares the business plan—

(a) identify all reports which —

(i) are publicly available;

(ii) analyse the trading costs of tied pubs in the United Kingdom, or any area within it, and the costs of the tenancies and licences under which such pubs are occupied; and

(iii) provide relevant data against which the tenant can compare the performance of the tied pub for the purposes of preparing the business plan;

(b) advise the tenant to consult those reports; and

(c) provide to the tied pub tenant—

(i) the reports identified under sub-paragraph (a); or

(ii) information as to where, and how, the reports can be obtained.

(4) The pub-owning business’s duty in paragraph (3)(c) does not apply in relation to a report which the tied pub tenant has confirmed to the pub-owning business the tenant has read.

(5) A “sensitivity analysis” is an analysis of—

(a) the potential business performance of the tied pub in the case of an increase or decrease in business income; and

(b) the effect of that increase or decrease on the tied pub’s costs and profitability.

(6) The “tenancy or licence period” means the period which—

(a) begins with the day on which the tenancy or licence first confers on the tied pub tenant the right to occupy; and

(b) ends with the earliest of the following days—

(i) the day five years after the day mentioned in sub-paragraph (a);

(ii) the last day on which the tenancy or licence confers on the tied pub tenant the right to occupy;

(iii) the rent review date.

(7) Where a protected 1954 Act tenancy is renewed, the pub-owning business must—

(a) identify the reports mentioned in paragraph (3)(a), as if a sustainable business plan were being prepared;

(b) advise the tenant to consult those reports; and

(c) provide to the tied pub tenant, before the tenancy is renewed—

(i) the reports identified under paragraph (3)(a); or

(ii) information to the tenant as to where, and how, the reports can be obtained.