The Government has released the second part of its consultation into the pubs code, which concentrates on fees, enforcement and other areas of the code.
It also sets out the Government’s position on the controversial element of Parallel Rent Assessments. On this point, the Government says: “The Government considers that a PRA as a separate remedy to the MRO option process is not required because the core intention of the PRA comparison of a tied rent alongside a free-of-tie rent, in other words, in parallel – will now be provided for within the MRO option process itself.”
The consultation also discusses exemptions from the code, including the definition of genuine franchises.
On the latter, the Government said: ”The Government is honouring the commitment to exempt genuine franchises from the MRO option. It also intends to exempt theseagreements from other provisions in the Code that regulate the setting and negotiation of rent.The rationale for this mirrors that for the MRO exemption; that is that genuine franchise agreements –with characteristics that avoid or significantly mitigate the inherent risks related to traditional tied rent agreements –are likely to lead to a fairer share of risk and reward for tied pub tenants. This is particularly relevant where they avoid the risks inherent in the setting of a tied rent in combination with prices charged for products supplied under the tie agreement.”
The consultaion also reiterates that franchised sites will continue to be included in the calculation of the number of tied pubs which determines the definition of a pub-owning busines.
Other exemoptions discussed include those for tenancies at will and short term agreements with the Government suggesting 12 months as the period for exemption.
Responses are being sought until 18 January.
To view the full consultation click here
