Entering the trade guide to transfers tranfer awareness

Guide to transfers: Transfer awareness

The Peaks Inn, Castleton - bar

The Peaks Inn, Castleton - dining

What else should I be aware of?

Lots of things, here are a few pointers:

Business performance:

View at least the past three years trading performance. Take into consideration everything from rates, purchase costs, fixed overheads, variable overheads, profitability, turnover, cash flow, when does the business take most cash, when does it struggle, is it seasonal, what state of repair is it in, does it need extra money spending on it? The list is endless, but never be afraid to ask.

Staff:

Because you're buying a going concern - who are the staff, what contracts do they have, are they leaving with the out-going licensee, are there too many, do you have a chef, what role will you perform?

These questions need to be asked because under the Transfer of Undertakings regulations, once the agreement is transferred, you take full responsibility for all staff who have transferred with the business.

They are your employees! Ensure that you consult your solicitor to obtain a full understanding of your responsibilities.

Suppliers:

Who are the suppliers, do they offer any special deals to the existing licensee, will they give you the same, how do you audit them?

Has the current licensee entered any long-term supply contracts? These cannot be often cancelled easily.

Get copies of all agreements.

Licenses:

Be aware of all licensing regulations and any special clauses in existence. Also, whose name is on the licence? Make sure these are changed!

Be aware of any planning restrictions / applications / licensing conditions - these will all become your responsibility eventually.

Ask them: "Why do they want to sell?"

Make sure you understand exactly why they want to sell the business. Remove all the emotional reasons from your thinking and stick to facts, always be commercially minded in your negotiations.

In turn, they might want to know certain things about you before they are happy to sell the business to you.

They might want to know your plans for the business / funds available / your plans for staff and how you will be treating them. They'll also want to remove their personal details from any supplier contracts or licenses held in their name. They might even credit check you to make sure you have no outstanding County Court Judgements etc.

In any event they'll need written assurances that they have no on-going liabilities once the pub is sold to you.

Financial assistance:

It may be possible after discussion that we can help you finance the cost of the transfer. This is something we will look at on an individual basis.

The agreement:

Also don't presume the agreement is the same as we prescribe. The Punch Taverns licensee agreement is relatively new. The agreement you are buying could have been issued by Vanguard or Bass, prior to Punch taking them over. Whatever the agreement make sure you understand the full terms, including discount, length of tenure etc.

In all cases the person is selling a fully repairing agreement, this means they should have kept the property in good condition. If it isn't make sure they rectify any problems before the buck is passed to you. Think of it as if you were buying a house, what would you do if you knew the roof leaked?

Appoint the professionals:

Appoint a solicitor to look at the agreement, get an accountant to look at the books. Remember, it is your responsibility to make sure you are getting a good deal.

Read this guide from beginning to end, you're not necessarily setting-up in business you are acquiring one.

Business planning:

Put together your own business plan on the outlet. Are you intending to make changes? How will these changes affect your finances?

Ask the out-going licensee to show a detailed business plan. What were they planning for the pub over the next few years? Read more in business planning.

What role do Punch play in the transfer process?

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