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chise model, or something akin to it, and is ef- fectively a hybrid, a blend of the managed and tenanted/leased models. Marston’s Retail Agreement, which was in-

troduced in 2009, allows the brewer to retain greater control of the retail offer in its tenanted pubs; but the licensee still runs the pub as his or her own business and remains self-employed. The agreement evolved as a direct response to the more challenging market conditions faced by the pub industry in the last few years. If it sounds like an overbearing approach, with

Marston’s dictating what a tenant can or cannot do, it isn’t supposed to: at its heart, the aim of the agreement is to provide increased support for the licensee and to give these pubs a better chance of surviving. As Marston’s has always made clear, its agree-

ment also aims to improve the relationship be- tween tenant and landlord, bringing an end to arguments about rents and beer prices – since Marston’s pays for both.

IMPACT OF THE MARSTON’S AGREEMENTS When these agreements work, everybody stands to win: the pub company, the tenant and the cus- tomer, who gets a better pub with a more con- sistent offer. And for Marston’s it’s been a great success, helping the brewer to turn around its tenanted and leased division, and bring it back into growth. The company’s latest results emphasise the

impact the Retail Agreement has made, with those pubs converted to the new agreement con- tributing profit growth of £1.3m last year. Most recently, in the 16 weeks to 21 January, like-for- like profit in the tenanted, leased and franchised division was up by 3%, largely as a result of the Retail Agreement conversions. Typically, Marston’s will spend £50,000 im-

proving each pub, with a minimum target re- turn on capital expenditure of 20%. So far, Re- tail Agreements have been implemented in 337 pubs ,with profit uplifts in line with targets. The agreement will be rolled out to a further 200 pubs in 2012. Marston’s has a target of 600 pubs it would like to have signed up to the new agree- ment by the end of 2013. Currently, the company has no plans to increase that number, but sug- gests it may review the situation at some point in the future. A survey of 132 franchises last year found that

93% of them would be happy to recommend the agreement to others, an impressively high ap- proval rating. That’s perhaps not surprising given that the

Retail Agreement has a huge effect in increasing annual profit for the pubs involved. Marston’s esti- mates the expected annual profit of the 600 pubs earmarked for conversion to be £8m before the Retail Agreement is implemented, but a stagger- ing £14m post-conversion. Unsurprisingly, some


85% of franchisees said they were “making an acceptable living or better” when surveyed last year.

Ralph Findlay, chief executive of Marston’s, is

clearly pleased with the results so far. “The Retail Agreement is proving to be an appropriate and successful response to the challenges faced by many operators in the tenanted pub industry,” he says. “It encourages entrepreneurialism amongst licensees, enabling them to manage successful businesses with the benefit of our support, econ- omies of scale and retailing expertise.” As he suggests, the kinds of insights and dis-

ciplines that underpin the success of Marston’s managed arm can be introduced to its tenanted pubs, supplying licensees with appropriate men- us, marketing material and advice on entertain- ment. Some free training is also provided.

IT’S NOT FOR EVERY PUB COMPANY Because pubs run on a franchise-style model are effectively part-managed by the brewer from the company’s headquarters, these types of agree- ments are easier to introduce if the brewer al- ready has a managed arm, with management


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