An assignment is when an existing lessee wishes to sell the remaining term of the lease they have on their pub to a third party. The premium or the amount in cash terms they sell the house on for will be either set by the lessee who is selling or by their agent. Fuller’s plays no part in determining the price at which it is placed on the market.
You will be purchasing the entire business and the price you pay could include a premium or cash sum for the goodwill of the business. You will need to ascertain how much goodwill you believe there is and also take into account the rent for the premises and any outstanding repairs there may be before you make your final offer. Included in the purchase price will be all the fixtures and fittings. In addition, on the day of the change, you will need to buy the stock, glassware and sundry catering equipment. A deposit of £8,000 and one weeks' rent in advance will be required by Fuller’s and you will need sufficient monies to place a beer order and have some working capital available once in the pub.
To ensure that you are obtaining the best deal on the purchase of the assignment, you should consider appointing your own valuer. You will have access to at least three years' trading figures, which will be provided by Fuller's. The outgoing lessee is required to furnish you with at least two years' accounts, along with fixed/variable overheads and rates for the business. We would also advise you to request to see the last year's VAT returns.
It is imperative that you have a full structural survey completed on the building as you are purchasing a fully repairing and insuring lease. Any problems found will need to be put right by either you or the outgoing licensee, but this will all be part of the negotiations for the pub.
Any member of staff already employed at the establishment will be your responsibility after the purchase, so ensure that you have all their contracts, working hours and details. You should also check what contracts you have with suppliers and their lengths and terms. A full reminder of the many other points to take into account once you have successfully been appointed can be found in the countdown to takeover section.
Finally, obtain as much professional advice as possible with accountants, valuers, surveyors and the licensing department. Make sure you conduct sufficient research on the pub of your choice, if you do then this will ensure that this is the right venture for you.
Once you have made the decision that you wish to purchase the pub from the outgoing lessee, just like any other pub application you will be required to complete a business plan and attend an interview with the Business Development Manager who is responsible for the pub. If that is successful, a further final interview will take place with the Operations Director at Fuller's. At the interview you will be expected to have completed or bring along:
- Full business plan for the short and long term development of the business
- Details of any premium you are paying and whether this includes fixtures and fittings
- Profit and loss account for first and second year with estimations of income and realted costs that also provides for indexation to the rent
- Cash flow forecast for the first and second year
- Confirmation of financial position including proof of finance
- References (personal, banking or trade suppliers)
- The BII Certificate of Pre-Entry Awareness Training.
- A copy of your personal licence
- Demonstrate that you have taken independent financial advice
- Proof you have independendently prepared the business plan and have taken advice from an expert normlally this will be your accountant including a sensitivity analysis.
In return you can expect the following information from Fuller's:
- Confirmation of the physical condition of the property and insurance obligations - please note this is not a Building Survey which you will be encouraged to carry out before we allow the assignment to take place.
- Details on any restrictions contained within the lease agreement in respect of the use of the premises
- Details of the premises licence, together with any conditions relating to the licence, plus details of any enforcement action that has taken place during the previous two years
- Three years' trading history in terms of goods supplied by Fuller’s in the form of barrelage or litreage of wines and spirits
- The terms of the supply of all amusement machines, their management and the share of income
- A copy of the current price lists, the discounts applicable and details of the wet tie
- Details of the credit/payment terms applicable to the agreement
- A full explanation of the rent review procedure
- Details on Fuller’s capital investment programme
- An agreed change date wherever possible
- Details of the training programme the assignee's are expected to undergo
- An explanation of the terms under which flow monitoring equipment is operated and the way such equipment is used within the business (Appendix 3)
- A copy of this code
A checklist will be signed by both parties to ensure that you are fully satisfied that all the relevant issues have been discussed understood and agreed by both Fuller's and assignee. You will receive a copy of the signed checklist.
You can find all current assignments here.