Glossary

Although presented to assist owners, operators and potential buyers of licensed businesses, the information contained in this section is in many cases very simplified. In using this section, you agree to understand the inherent limitations, you agree not to rely upon any glossary content without seeking appropriate professional advice, and declare that you will not hold Inn Control responsible for any loss occasioned in relying upon any information obtained from this website

Annual Percentage Rate of Loan Interest (APR)

Lenders have to quote the Annual Percentage Rate (APR) of a loan so that you can compare difference schemes. The calculation of APR takes into account other costs such as the arrangement fee and indemnity premium. It gives a more accurate indication of which lending is likely to be most expensive

Assignee

The purchaser of a lease, who accepts the assignment from the seller

Assignment/Assigning

One way in which a tenant may pass on the lease obligations to a third party, generally by selling the lease and business to a successor (assignee) who has first been approved by the landlord as assignee

Assignor

The seller of a lease, who assigns the lease to a purchaser

AWOPM - Amusement without Prizes Machine

i.e. a coin in slot game/entertainment machine without prizes

AWPM - Amusement with Prizes Machine

i.e. ‘one arm bandit’

Barrelage

The volume of beer sold by a particular outlet, usually stated in 36 gallon units – a “brewers barrel"

Break clause

A provision in a lease allowing either the landlord or the tenant to terminate the lease at a specified date without waiting for the term to expire

Brim Glasses

Glasses that hold a half pint or multiples and do not allow for a head

Broker (Licensed Trade)

In the licensed business transfer context Agents are sometimes instructed to find tenants for Brewers or Pub Cos where the Brewer/Pub Co does not pay us a fee. In such circumstances, the Agent acts as a Broker and the applicant / prospective purchaser becomes a client, paying us a fee for introducing them to the pub which they obtain. This scenario is most common where a short term (e.g. 3-5 years) tenancy is offered

Building Insurance

An insurance policy to protect against loss or damage to a property. It is usually necessary to arrange building insurance upon exchange of contracts, prior to completing a purchase

Business Plan

An appraisal of a business providing an analysis of what it is achieving at present and what the prospective purchaser might plan to do with it, including profit and loss and cash flow calculations. Business Plans are invariably required by Pubcos of potential lessees and Banks of potential borrowers. Inn Control can help you with this

Cash Flow Analysis

One of the exercises in the preparation of a business plan. Even though a Projected Profit and Loss Account may show a profit on the first year, heavy start up payments on refurbishment etc. may cause the business to go into the red in the early months. A month by month cash flow analysis demonstrates when the business is likely to be in deficit so that adequate provision can be made in advance for a Bank overdraft

Cask

Wooden or metal container used for maturing real ale

Chill Haze

Cloudy layers that appear in the drink when it has been dispensed

Completion Date

The day when the property actually changes hands, with the purchaser taking possession following payment of the full price to the seller - usually arranged by solicitors

Composite Barrelage

Used by Brewers and Pubcos as a method of expressing total wet trade including beers, ciders, wines and spirits. Beers and ciders remain as 36 gallon barrels, and wines and spirits are converted to barrelage equivalent. Many Pubcos also include mineral supplies in the composite barrelage

Contents Insurance

While insurance cover for the contents of a business is not a legal requirement for a freeholder, many leases require the tenant to have this cover

Contracted Out

Contracted out of protection of the Landlord and Tenant Act 1954. The effect is that, at the end of a lease, the tenant does not have any right to claim an extension to the lease and must give possession unless the landlord chooses to offer another lease

Covenant

A legally binding obligation in a sale or lease

Dilapidations Deposit

A deposit held by the landlord as protection against the lessee failing to repair the property

Draymen

Men who deliver beer, wines and spirits to outlets – often external contracted firms

Dry Sales

Income from food

Easement

A right that the owner of one property has over an adjoining property, e.g. a right of way or a right of light

EHO - Environmental Health Officer

Liquor and catering businesses are subject to inspection and approval by the environmental health officer to ensure compliance with hygiene and safety regulations

Fixed costs

Running costs that do not vary, e.g. rent, rates, insurance, accountancy

Flash Cooler

Chilled unit found at the point of dispense – the cellar temperature drink is then chilled quickly through a choke point at low temperature

Fobbing

Excessive froth on a draught product – can be caused by a number of different issues, from incorrect cellar temperature or dirty glassware, to drink contamination or dispense gas issues

Good Average Tenants Trade (GATT)/Reasonably Competent Operator (RCO)/Fair Maintainable Trade (FMT)

A Brewers or Pubco’s assessment of the trade which a good average tenant should be capable of achieving in a particular house. Also called a RCO (Reasonably Competent Operator) or FMT (Fair Maintainable Trade) assessment

Gross Profit Percentage/Mark Up Percentage

The percentage of gross profit is measured relative to the selling price of goods in comparison with mark-up which is measured relative to the cost price of the goods e.g. (and assuming that VAT is excluded from both cost and selling prices) an item which retails for £1 but costs 50p produces a 50% gross profit and the mark up on cost is 100%

Ground rent

A rent of the land on which a building stands, but excluding the building

Guest Beer

Beer offered for sale other than those supplied regularly. Occasionally outside of the tie

Head

The amount of froth dispensed on the top of the beer or other draught product

Hotel or Residential Licence

A Part IV licence, the conditions of which are varied by the provision of accommodation. No permitted hours apply to a resident or their bona fide guest

Ingoings

Often called Estimated Publican Ingoings. Specifying the total cash capital requirement for a short (1-3) year tenancy, to cover the cost of buying the trade inventory, stock, security deposit and expenses

Internal Repairing

Describes the responsibility of the tenant or lessee being limited only to repair, decorate and maintain the interior of the property, plus windows and doors. The lessor/landlord undertakes to maintain the main structure of the building

LAB & NAB

Low alcohol beer and non-alcoholic beer

Landlord and Tenant Act 1954

The main Act setting out the law relating to business tenancies in England and Wales. Unless ‘contracted out’ the lessee has the right to apply for a new lease at the end of the initial lease term, and the grounds for the landlord to refuse are limited to three basic reasons: (a) tenant’s non-compliance with the terms of the lease (b) the landlord wishes to redevelop the property (c) the landlord wishes to occupy the property himself

MAT - Moving Annual Total

A brewers projection of trade (usually expressed as barrels etc.) for a full year based on the trade for a part year

MRO

Market Rent Only (MRO) is the right of a tied-pub tenant to go free of tie. To request the option to go free of tie, a tied-pub tenant must give notice to their landlord. Notice can be given if any of four specific MRO events occur: • At tenancy renewal; • Following receipt of a rent assessment proposal as part of a rent review process; • Where there has been a significant increase in price in a tied product or service; • Where an event has occurred that significantly impacts on trade

Overspill Glasses

Glasses that allow a head to be dispensed – lined and Crown stamped

PPL - Phonographic Performance Limited

A body that collects licence fees for music publishers from publicans who play music for their customers

Privity of Contract

In the context of leases, makes the original tenancy responsible if a subsequent tenant (assignee) fails to meet the obligations of the lease

PRS - Performing Rights Society

A body which collects royalties for artists and performers from publicans who play recorded music

Put and keep in good repair

A condition in a lease which makes the new lessee responsible for not only keeping the property in good repair as per its existing condition, but also putting into good condition any current defects

Repairing and Insuring

A clause referring to the responsibility/obligation of a lessee. The lessee is fully responsible for all repairs and insurance of the building to be leased

Tapping

A tap is inserted into a cask as part of the preparation for serving

Temporary Events Notice

A licence granted to a licensee providing authority to sell intoxicating liquor away from the premises or outside of usual hours but only at an approved location at a specified date and time. This licence is granted effectively as an additional facility to an existing licence

Thimble measures, or ‘Jiggers’

A measure used when serving spirits and vermouths

Thrawl

Wooden, trestle type bench for storing barrels

Topped up

Beer added if the measure falls below the half pint/pint line after degradation of the head

Transfer of a Business as a Going Concern (TOGC)

When a business is sold or transferred as a going concern, whether freehold, leasehold or tenancy, by a VAT registered seller to a VAT registered buyer, provided some basic conditions are fulfilled, VAT is not chargeable on the sale of the assets

TUPE - Transfer of undertakings (Protection of Employment) Regulation

The regulations giving employees protection against dismissal when a business changes ownership

Ullage

Shortfall on a cask due to evaporation/leakage (Beer)

Vacuity/Ullage

The air space in the neck of bottled drinks

Wet sales

Income from drinks