Pubs to allow tenants to buy their beer from other suppliers, what next McDonalds can have a guest burger from Burger King

Ladies at Beer FestivalThis morning on Reuters they announce that a new code of practice is to be released for the pub industry. The last thing the pub industry needs is more regulation.

Quote from Reuters

Business Secretary Vince Cable said that pressure also comes from powerful pub companies who lease property to tenants with the condition that they also buy beer from them, often at high prices.

The statement may well be slightly true, but one of the problems here is that the landlords own the pub. The tenants do not, it is a franchise system. They pay in to the brand and as such must meet the terms of the brand. Not a complicated practice. If it is a Free House then it is not tied to any brewery. The tenants know this when they buy the lease. Those that do not meet the terms of the lease with selling beer, usually those who are selling tinnies under the counter, are vacated from the premises.

If the Government would like to push forward with the genius idea of allowing a pub franchise owner to buy their stock from a different supplier, how exactly is the franchise model supposed to work?

Were this to be rolled out throughout the pub industry then what is to stop other industries forcing a legal challenge? Then we could walk into a McDonalds and buy a Burger King Whopper, some may say a good idea, reality is though the whole business model of a franchise without the uniformity is pointless. If one franchise is poor quality then the reputation of the others is hurt by brand association. The same will happen here.

The comments say they will help businesses be able to sell cheaper guest beer. Looking at the Sam Smiths model then it could well be that they could sell more expensive worse quality beer.

The Government should not be regulating the destruction of the franchise industry and should have a hard look at tin pot ideas from the Business Secretary.


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