Buying a Public House, Restaurant or a Bar
If you are considering buying a pub or a bar, you should obtain specialist legal advice as there are so many issues to consider. Some of the essential points are listed below. Emmersons Solicitors Commercial Property Department in Newcastle and Sunderland offer quality legal advice. We can assist with your purchase or lease. We appreciate that this will be a very important transaction for you.
How much are you paying to the seller?
This is a matter for negotiation with the seller. If you are buying a going concern, the amount you pay might usually consist of premiums for the following:
It is obviously important you pay the right price, so you may wish to have your own valuation carried out.
The type of premises:
Whether the property is leasehold or freehold is likely to have a significant impact upon your business.
If the property is freehold, there may be a much larger premium to pay when you purchase, but there will not be any rent payable once you are in occupation. Conversely, if the property is leasehold, the premium payable when you purchase is likely to be smaller, but there will be commercial rent to pay that could be substantial.
Additionally, if the property is leasehold, a buyer will have to consider all the obligations and ramifications of entering into a commercial lease (please see our page about commercial leases for further information).
Stamp Duty Land Tax may be payable. This is assessed on the price paid for the property and, in the case of newly leased properties, the level of rent. Goodwill may also be subject to Stamp Duty Land Tax if the goodwill is intrinsic to the property from where the business is run.
Often a brewery will lease a pub to a tenant. In addition to the usual obligations of a commercial lease, the tenant will be under an obligation to buy the majority, if not all, the drinks they sell from that brewery at prices set by the brewery. In addition, there may be set minimum quantities of drinks that the tenant must buy.
The terms set by breweries for tied pubs can be very stringent. If you are looking to purchase a tied pub you should contact us before signing any documentation. You will need full advice on the ramifications of entering into an agreement with a brewery.
A buyer of a pub or bar will need both a premises licence and at least one personal licence for the sale of alcohol. Without these the pub or bar will not be able to function. Additional licences may also be necessary. For example, if you intend to play music.
It is very important that the conditions of the licenses match the needs of the business. For example, the hours when alcohol is to be sold should match the hours specified in the licence as permitting the sale of alcohol. Your licence should not require you to comply with conditions which are impossible for you to adhere to.
Where a pub is tied, a brewery may wish to deal with the transfer of the licences into the buyer's name. As a buyer you should be aware that the conditions of the licences must still be checked by a solicitor. The brewery will seek a licence that may suit their needs more than your own. Emmersons Solicitors Licensing Lawyers can assist you with all aspects of Licensing Law.
If you are purchasing a pub or a bar as a going concern, it is probable that there will be existing employees. As a buyer you should be aware that these employees retain their existing employment rights on the transfer of the business. The employees' contracts will need to be carefully scrutinised before the business is bought so as to ensure that you can check that the employees' rights and your obligations match the needs of your business.
Fire safety, asbestos and environmental health issues
There should be a current Fire Safety Assessment and Fire Safety Record. An asbestos report will also be necessary and checks made to ensure that any necessary remedial steps have been taken. If there are difficulties with these matters or environmental health issues are discovered, it is possible in perhaps the worst case scenario that the authorities could enforce the closure of the business. Therefore, everything must be in order.
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