Frequently Asked Questions

When you send a MRO Notice

  • “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 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 will have been sent to you as part of the tied rent assessment and can be found in the “Pubs Code & Our Code” section at www.starpubs.co.uk. At any point you can speak to your Estates Manager, BDM or email pubscode@starpubs.co.uk for further information or clarification.

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, and in some cases a Deed of Variation can be considered. However, there are significant drafting, tax, and legal cost implications of this route. The Estates Manager will contact you to discuss the MRO proposal within two weeks of it being sent, 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 agreement is compliant.
  • “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.
  • “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 agreements. They will contact you within two weeks after we’ve sent you your MRO proposal. In most situations the 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).
  • “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 how the process will happen 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 option. In some situations, if you take a new tied agreement 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?”
    • MRO rent payment dates 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 is the same as the deposit requested in Star’s MRO 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 its less then the balance will be returned to you.
  • “Will my insurance level change?”
    • Not if you accept the insurance provisions of the MRO proposal sent to you. If there are changes to the provisions during the negotiation on the MRO lease this could increase the insurance charges.
  • “Will my repairing liabilities and benefits change under an MRO agreement?”
    • MRO agreements are offered on a full repairing basis and may be different to your current tied agreement.
  • “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 agreement (either by new lease or deed of variation). You may be required to pay for Star's legal, dilapidation survey, fixtures and fittings valuation fees, 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 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 agreement (whichever is the soonest), 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).
  • “Will there be a stocking requirement in the MRO option? If so, how will this be considered?”
    • Yes, Star will require you to enter into a stocking arrangement. The level of stocking will depend on the circumstances around the current and future trading of the pub. More detailed information will be provided to you as part of the MRO 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. This will take the form of a percentage and number of total taps or fridge space at the pub by beer & cider format (keg, cask and packaged). The percentage and number will vary by pub but the method of arriving at that number and percentage will be explained to you at the time. 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, an MRO agreement 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 like insurance costs and in some situations a service charge.
  • “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 as least as long as the remaining period 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.
  • “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?”

Rent

  • “Will my rent change if I go MRO?”
    • It is likely to change. Typically MRO rents are higher than equivalent tied rents. 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.
  • “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.

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 option if I request it?”
    • No. You can decide not to pursue the MRO option 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 else you will lose your MRO rights. At the end of the process, once you know the MRO agreement and rent, you have 21 days to accept the MRO tenancy. A guide to the MRO timetable can be found on the PCA website.
  • “What happens if I want to accept the MRO option?”
    • Once you accept the MRO option legal documentation is prepared and the new agreement entered into.
  • “What happens if I do not want to accept the MRO option?”
    • 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 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.

CCOs and BDM roles

  • “How can the CCO help?  When and how can I contact the CCO?”
    • The CCO is Chris Moore Property Director and the Code Compliance Manager is Lynne Winter. Both can be contacted via pubscode@starpubs.co.uk.
  • “When I request an MRO agreement 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 agreement the relationship with Star will be more an arm’s length Landlord and Tenant relationship. The BDM will visit less regularly and conversation 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.
  • “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 benefits offered to Heineken stockists that are relevant to the way you purchase your Heineken products (i.e. 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. 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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