Meet the sponsor
Nicholas Davies of HRJ Foreman Laws Solicitors, sponsors of the Hertfordshire Life Food and Drink Awards outstanding customer service category, gives advice for those considering taking on premises in the sector
There are many things to consider when running a restaurant, bar or café. A natural focus is on menus, the quality of food and providing excellent customer service. Then you must also focus on financial matters and property will be one of the biggest single expenses for the business.
If you have ambitions to open multiple locations or are seeking to lease premises for the first time, the realisation of the ‘legal’ implications on top of the finances can feel overwhelming.
If you are buying a pub, it’s quite possible you will be taking a tied lease from a brewery. This means you are bound by its terms which may include how you buy alcohol and what you sell. It may also contain clauses that enable the brewery to cease your tenancy if profit targets or agreed terms are not met. Tied leases are usually non-negotiable, so ensure you are fully aware of all your obligations and liabilities before you sign the dotted line.
If you are taking a free of tie lease, you’ll still need to be sure that its terms are suited to your establishment. A solicitor will help you to negotiate any new terms at an early stage and avoid complications later down the line.
If you are buying a freehold property, ensure there are no restrictive covenants in the title to stop you from operating as a food or beverage business. Ask your solicitor to read the title from the land registry before you make an offer.
Repair & maintenance
‘From expanding business to first-timers, the legal obligations on top of the finances can feel overwhelming’
The answer to who is responsible for upkeep will be found in the leasehold agreement. Invest in a survey to know what condition the building is in. Be clear about what falls under your responsibility for repair, maintenance and dilapidation. If property improvements are planned during the tenure, these must be permitted within the terms of the lease.
If you’ve got a lease and want to transfer it to another owner you’ll need consent from the landlord, and you must demonstrate that the new tenant is suitable to meet the obligations of the lease. You may have to provide security and guarantee the suitability of the buyer. A solicitor will help you to negotiate in these situations.
Shareholders & investors
Planning on having shareholders or investors in your resturant, pub, bar or café? Then ensure you have a shareholders’ agreement which clearly states who and how business decisions are made. This should also include who has control over any future sale process. If you have minority shareholders this will need careful management.
Taking on employees
You may take on existing employees if your purchase is part of an ongoing concern. This means their contracts will be retained. Ensure you carefully review all the employment contracts and are satisfied that they match your vision before you make the purchase.
Make sure a solicitor has checked all the conditions of a premises before taking the leap