25 Mar The legalities of buying or leasing a restaurant, pub or cafe premises
Nick Davies, partner and commercial property solicitor at HRJ Foreman Laws Solicitors considers the legalities of buying or leasing premises in the food and beverage sector
There are so many things to consider when you are running a restaurant, bar or cafe. Your natural focus is on your menus, the quality of your food and providing excellent customer service. Then you must also focus on your financial matters and your property will be one of your biggest single expenses for your business.
If you have ambitions to open multiple locations or are seeking to lease your own premises for the first time, the realisation of the ‘legal’ implications on top of the finances can be overwhelming.
But with the right legal advice from a solicitor that understands the property market, you should be able to make the right property choice for your business and get on with running it your way.
The legalities of buying or leasing a restaurant, pub or cafe premises include:
What exactly is in your leasehold agreement?
If you are buying a pub, it is quite possible that 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. Your solicitor will help you to negotiate any new terms at an early stage and avoid any complications later down the line.
If you are buying a freehold property, ensure there aren’t any 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. Sometimes a covenant can be overturned.
Who is responsible for repair and maintenance?
The answers will be found in your leasehold agreement. Invest in a survey to know what condition the building is in, and be clear on 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.
Transferring your leasehold to another establishment
If you’ve got a lease and want to transfer it to another owner you will 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.
Will you have other shareholders or investors in your restaurant, pub, bar or cafe?
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 from a previous owner
You may be taking 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 will match your vision before you make the purchase.
Looking to lease or buy premises? Speak to our Commercial Property team today
- Email info@hrjforemanlaws.co.uk
- Call Hitchin, 01462 458711, Welwyn Garden City, 01707 887700, Old Harlow 01279 709 100.
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