Entering the trade guide to transfers what is a transfer

Guide to transfers:

Choughs, Chard - skittle alley

Choughs, Chard - bar

What is a transfer?

A transfer is when one of our existing licensees wants to sell the remaining term on his or her agreement to a third party.

If I'm paying a premium over a vacant pub, then what's the attraction to spend a lot of money on a transfer?

You will only be buying the goodwill within the business and the remainder of the agreement. This may not be 10 years, as the current licensee may (for example) be four years into their 10 year term. The attraction and the benefit is that you are buying an established business. With a vacant pub you usually have to start pretty much from scratch and build up your own goodwill in the business. A good transfer will have a lot of goodwill already within the business, it should be financially viable, have a strong customer base and excellent profitability and prospects for growth.

How much will it cost me to purchase the transfer?

This figure is based on a calculation of profit and term remaining on the agreement. However, you should bear in mind that this is the figure determined by the licensee selling the agreement or their agent, you should be careful and appoint your own valuer to conduct a valuation on your behalf.

What are the pitfalls of purchasing a transfer?

The main pitfall is that you pay too high a premium and don't achieve the value for money or return you envisage. You need to be aware this premium is paid direct to the outgoing licensee. It is vital that you thoroughly negotiate the amount because none of the final payment will go into the business. You are only paying for the goodwill.

Please note:

The cost of a transfer is not set or pre-determined in any way by Punch Taverns. It is a price set by the individual licensee and bears no relationship to what we as a company require for the business.
Your task will always be to ensure that you're getting good value for the premium you'll pay.
A typical transfer premium could be between £10,000 - £200,000.
Another pitfall would be if you choose not to complete a full structural survey of the property.

What role do Punch play in the transfer process?

What else should I be aware of?

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