Frequently Asked Questions

When you send a MRO Notice

  • “When can I serve an MRO notice relating to my rent event?”
    • Star must receive your MRO notice within 21 days of the MRO event, starting on the day the MRO event occurred. A guide to the MRO timetable can be found here on the PCA website.
  • “What happens once I have sent my MRO notice?
    • Star Pubs & Bars will confirm by letter, initial receipt of your MRO notice. Within 28 days of sending your notice, you will be sent a pack by us by recorded delivery which will contain your MRO proposal and supporting documentation. Please refer to the Working with Star and Tied Rent Assessment & Rent Review documents which contain more information. Copies of these can be found in the Pubs Code & Our Code. At any point you can speak to your Estates Manager, BDM or email pubscode@starpubs.co.uk for further information or clarification.

If you do not receive your proposal within the 28 days, you have 14 days, beginning the day after the end of the period of response, to make a referral to the Pubs Code Adjudicator (PCA). A guide to the MRO timetable can be found on the PCA website here.

Approach to MRO Proposal and Negotiations

  • “Will my MRO have to be via a new lease, or can it be a deed of variation?”
    • Star’s initial proposal will be via a new lease. We believe a new lease is a simpler and clearer approach. This area of the Code is complex and evolving, but in some cases a Deed of Variation can be considered. However, there are significant drafting, tax, and legal cost implications of a deed of variation. Your Estates Manager will contact you to discuss the MRO proposal within two weeks of it being sent by us, and they can discuss this option with you at that time.
  • “I’ve been told that MRO can be achieved by just deleting my tied clauses from my existing lease”
    • This is not correct. An MRO lease and a tied lease are used to document quite different commercial relationships. There will be multiple changes required to ensure the new MRO lease is compliant. This is one of the reasons why our initial MRO proposal will be via a new lease.
  • “How long will my MRO tenancy be?”
    • The new MRO lease must be at least as long as the remaining term of your existing tied lease. In some situations you may be offered a longer MRO lease (up to 10 years), however this is at our discretion and will be assessed by us on an individual basis.
  • “Will the terms in the MRO proposal be the same as those in my tied tenancy?”
    • No there will be multiple changes to the terms. The two leases document very different commercial relationships.
  • “How will MRO negotiations be carried out?”
    • Our Estates Managers negotiate MRO leases. They will contact you within two weeks after we’ve sent you your MRO proposal to start this process.  Your Estates Manager will have a meeting with you to discuss your tied and MRO options before the initial tied rent proposal is sent to you (this starts the MRO timetable). 

The MRO negotiation period is 56 days, starting from the date you receive Star’s full MRO response.  During this time we will continue to work with you to reach an agreement.

  • "Who will manage my MRO negotiations? Will it be my BDM?”
    • The Estates Manager will manage the negotiations. The Estates Manager and BDM will meet with you before the rent review / MRO process commences. At that initial meeting the Estates Manager will explain the process and where to get further information.
  • “Will I be required to have a business plan?”
    • A business plan is not required if you decide to opt for an MRO lease. In some situations, if you take a new tied lease you may be required to provide a business plan.   
  • “Will I be required to change my rent and deposit payment dates? Will my deposit level change?”
    • Rent payment dates in an MRO lease are either quarterly or monthly in advance, depending on a number of factors (type of pub, level of rent, etc), which therefore may be different to your current tied lease. Most Star tied leases require 3 months rent deposit and this is the same as the deposit requested in Star’s MRO lease proposal. If the level of deposit required under the MRO lease is more than your current deposit, you will be expected to top the deposit level up, if it’s less, then the balance will be returned to you.
  • “Will my repairing liabilities and benefits change under a MRO lease?”
    • An MRO lease is offered on a full repairing basis and may be different to your current tied lease.
  • “Will there be any upfront costs if I go MRO?”
    • It depends on your current circumstances. There will be legal costs incurred to document any new MRO lease (either by new lease or deed of variation). You may be required to pay for any fixtures and fittings owned by Star, repay any loans, increase deposit payments and additional rent in advance. You may be refunded deposit balances, and any overpaid rent if applicable.
  • “Will I have to pay for any dilapidations if I request MRO?”
    • You will not be required to pay for dilapidation survey fees. There is an expectation that you will remedy any dilapidations (carry out repair work), before the first rent review or expiry of the new MRO lease (whichever is first), unless any identified dilapidations are considered necessary to be undertaken sooner (due to health and safety reasons or where the dilapidations are likely to cause further substantial damage to the pub).  We provide you with a copy of the dilapidations report with your MRO offer so that you can understand what obligations you have. The scope of works required to meet the dilapidations will contained in the MRO lease that you sign.
  • “Will there be a stocking requirement in the MRO lease proposal? If so, how will this be considered?”
    • Yes, Star is part of a brewing company (Heineken UK) and will require you to enter into a stocking arrangement. The level of stocking will depend on the individual circumstances of the pub. More detailed information will be provided to you as part of the MRO lease proposal.
  • “How does a stocking requirement work?”
    • You will be required to have a number of beer / cider taps and percentage of fridge display space (depending on packaging or dispense format), offering Heineken products in your pub. The number will vary by pub but the method of arriving at that number and percentage will be explained to you by your Estates Manager. You can choose which Heineken products to sell and choose where you buy those Heineken products from.
  • “Will I have to buy the Heineken products stocked under a stocking requirement from Star / Heineken?”
    • No you can purchased from wherever you wish.
  • “If I initially buy beer & cider from Star / Heineken can I change in the future?”
    • Yes you are free to switch suppliers of Heineken products at any time – subject to the terms of any supply agreements you may have.
  • “I still wish to purchase my product from Star, who do I speak to?”
    • Please speak to your BDM.
  • “If I choose an MRO agreement, does any part of the tie remain?”
    • No, a MRO lease doesn’t contain a tie. However, you will be required to enter into a stocking requirement (see above answers). You will also be required to pay some property costs (e.g. insurance costs) and in some situations a service charge.
  • “What happens to my stocking obligations if Heineken sells my pub”
    • Your stocking obligation ends if Heineken sells the pub and you will be free to stock any beer and cider.
  • “I have a long lease at present. What term do you have to offer me on renewal or at rent review if I opt for MRO?”
    • The new MRO lease must be at least as long as the remaining term of your existing tied lease. In some situations you may be offered a longer MRO lease (up to 10 years), however this is at our discretion and will be assessed by us on an individual basis.
  • “Will I still be tied for Gaming Machines?”
    • No.
  • “I have received my MRO proposal, but I am concerned about the terms on which it is being offered.  What can I do?”

You can refer the full response to the PCA if you believe our response has not included all that is required, which includes if you believe the response to be non complaint. You must make the referral within 14 days, starting the day after the end of the 28 day period of response.  (The 14 day period does not start when you receive the full response.) A guide to the MRO timetable can be found on the PCA website here.

If you are going to make an arbitration referral you must notify Star in writing, likewise if we are going to make a referral we will notify you.

Rent

  • “Will my rent change if I go MRO?”
    • It is likely to change. Typically MRO rents are higher than equivalent tied rents due to the change in the commercial relationship. The level of change will depend on your current level of tied rent – which could also change up or down depending on the situation surrounding your pub.
  • “How will the MRO rent be assessed?”
    • By comparing rents of other “free of tie” pubs in the location and adopting a profit based valuation. Both free of tie and tied rents are governed by rules and guidance set down by the Royal Institute of Chartered Surveyors (RICS).
  • “What can I do if I do not agree with the MRO rent provided?”
    • The Pubs Code provides that the rent can be determined by an Independent Assessor – an independent expert valuing free of tie pubs. Your Estates Manager can provide further details and discuss how to agree on the appointment of the Independent Assessor, or how to ask the Pubs Code Adjudicator to appoint one.  You can do this from day 29 of the negotiation period until 7 days after the negotiation period ends.  A guide to the MRO timetable can be found on the PCA website here.
  • “I have an outstanding rent review.  What will happen with that?”
    • There are a number of potential outcomes. In most situations it is better to understand the outcome of the tied rent review, so we will negotiate this in parallel with the MRO option. In most situations we offer the PIRRS scheme to independently determine the tied rent review.  Please refer to the Working with Star and Tied Rent Assessment & Rent Review documents which contain more information.

Referral

  • “In what circumstances can I refer the MRO full response to the PCA for arbitration?”
    • You can refer the full response to the PCA if you believe our response has not included all that is required, which includes if you believe the response to be non complaint.  You also have the option to refer if we have said your request is not valid and you disagree with our assessment.  In either circumstance, you must make the referral within 14 days, starting the day after the end of the 28 day period of response.  (The 14 day period does not start when you receive the full response.)
      If you are going to make an arbitration referral you must notify Star in writing, likewise if we are going to make a referral we will notify you.

Steps following negotiation

  • “What do I do if I do not agree with the rent being offered?  What will happen if I ask for the MRO rent to be sent to an Independent Assessor?"
    • We will endeavour to agree a mutually acceptable rent with you. However, if this is not possible an Independent Assessor can be jointly appointed or, if we cannot agree this, the PCA will appoint one. Information needs to be provided to the Assessor by both parties. The Estates Manager can discuss this further with you at the appropriate time.
  • “Do I have to take a MRO lease if I request it?”
    • No. You can decide not to pursue the MRO lease at any time. There are strict time limits that apply during the various stages of the process and it’s important that you adhere to them as otherwise you will lose your MRO rights. At the end of the process, once you know the terms of the MRO lease and rent, you have 21 days to accept. A guide to the MRO timetable can be found on the PCA website here.
  • “What happens if I want to accept the MRO lease?”
    • Once you accept the MRO lease legal documentation is prepared and the new lease entered into.
  • “What happens if I do not want to accept the MRO lease?”
    • You carry on with the tied lease arrangement and any rent reviews or lease renewals concluded.
  • “What can I do if I disagree with any of these points?”
    • In the first instance you should write to pubscode@starpubs.co.uk. Ultimately if we are unable to resolve any disputes you can refer the matter to the Pubs Code Adjudicator’s Office (please be aware of timescales to do so). A guide to the MRO timetable can be found on the PCA website here.

CCOs and BDM roles

  • “How can the CCO help?  When and how can I contact the CCO?”
  • “When I request an MRO lease will my relationship with my BDM change?”
    • The relationship with the BDM will not change during the MRO process. If ultimately you decided to enter into an MRO lease the relationship with Star will be more an arm’s length Landlord and Tenant relationship. The BDM will visit less regularly and conversations will be focused on lease obligations.  However, the BDM will still give advice in relation to Heineken brands covered by the stocking requirement, but not broader business development due to the change in the commercial relationship.
  • “If I enter into a MRO lease, will I be able to access Business Builder, business development, discounts and other benefits I currently enjoy?”
    • No, these benefits are only available to tied tenants. You will still be able to access qualifying benefits offered to Heineken stockists that are relevant to the way you purchase your Heineken products (i.e. like direct Independent Free Trade Customers).

Advisors

  • “Should I appoint an advisor to help me with my options?”
    • The MRO process can be complicated and Star recommends that you take independent advice to help you with the process and advise you of which options are best for you.
  • “Who is best to advise me?”
    • Star cannot endorse advisors. However, you need to consider what services the advisor is offering. Chartered Surveyors with experience in pubs are able to offer advice on agreements and rent, however sometimes more specialist legal advice may be required from a solicitor. Accountants may also give advice on the business aspects of your decision.
  • “Where can I get further help / information?”
    • Members of the BII (British Institute of Innkeepers) have access to some initial free advice through the network of advisors they have accredited. Membership of the BII is available to all tied tenants free of charge as part of your tied support package. Further details can be found here. The RICS and Law Society can also advise of members that specialise in pubs and MRO cases.
  • “When appointing an advisor what should I look for?”
    • The most important aspect to consider is their experience and impartiality. Have they dealt with pubs and MRO before? Consider what they are advising on - rent, legal agreement or broader business advice? Are they interested in the best outcome for me or are they pushing for a fee?
  • “Will I have to pay for advice?”
    • Some advisors may offer some initial free advice. You should expect to have any proposed fees clearly explained, and the circumstances in which those fees and any additional fees become payable.
  • “Is there anything I should watch out for”
    • Avoid large upfront payments or open ended subscriptions (payment of a sum each month either indefinitely or until the MRO is resolved). Some advisors receive commissions from third parties depending on the outcome of your case - in this situation you should think carefully about their impartiality. Do they carry professional indemnity insurance (PI Cover) – if they give poor advice can you make a claim against them? And do they have insurance cover to pay any compensation? Are they part of a professional body i.e. Law Society or RICS and therefore covered by professional standards and minimum performance standards?

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