In November 2019 the PCA added a further chapter to the PCA’s Regulatory Compliance Handbook. This provides minimum standards with which a pub company must comply each time it offers an MRO proposal to a tied-tenant. The new chapter aims to prevent unnecessary disputes between tied-tenants and their landlords.
1. A pub company should not issue an MRO proposal drafted on standard terms unless it has determined that the terms are compliant with the Pubs Code, taking into account the particular circumstance of the tied-tenant.
2. An “MRO Compliance Record and Declaration” must be completed by the pub company and signed by the Code Compliance Officer.
3. The MRO Compliance Record and Declaration must be provided to the tied-tenant on request.
4. The pub company must demonstrate that the proposed MRO terms comply with the Pubs Code tests for commonality and reasonableness.
5. The MRO proposal should be comparable to the offer that would be made to a free of tie tenant with negotiating strength.
6. In order to prepare the MRO offer, the pub company should obtain the following:
i. the existing lease
ii. the schedule of condition / schedule of wants of repair
iii. BDM meeting records
iv. information on the nature of the pub including details of trade and any other circumstances that may impact on the reasonableness of certain MRO terms
v. consult all relevant persons on the MRO proposal, including the Business Development Manager
7. When serving MRO proposal, the pub company should ensure that it:
i. does not present an unbalanced view of the perceived advantages/disadvantages of going MRO
ii. explains how any new obligations, such as increased rent deposits, will be dealt with
iii. does not mark the MRO proposal as “without prejudice”
iv. does not require the tied-tenant to do anything that is not a statutory requirement under the Pubs Code
v. does not raise any charges that will be payable even if the tied-tenant does not accept the MRO proposal
vi. clearly sets out all relevant deadlines with which the tied-tenant must comply
vii. offers to meet with the tied-tenant face to face to discuss the terms of the MRO proposal
viii. informs the tied-tenant that a copy of the MRO Compliance Record and Declaration is available on request
Photo by Andisheh A