An Enterprise tenant who bought his freehold at auction on a sale and leaseback basis believes he no longer has to buy beer through the tie, writes Ewan Turney.
Brian Mannion, who runs four pubs in London, acquired the freehold of the Black Lion in Kilburn at auction for last year for £1.3m.
Under the terms of the sale and leaseback, Enterprise now pays Mannion £80,000 a year in rent and he, in turn, pays them £50,000 a year in rent, with Enterprise collecting additional wet rent through the beer tie.
However, Mannion has decided to buy outside the tie, believing he is now free to do so. “I am essentially giving Enterprise a building in which to charge me a £200 premium on a barrel of beer,” said Mannion.
“It is a ludicrous situation.”
He said the relationship had become “unworkable” and that if the tie was enfoced, there would be “no incentive” for him to sell any beer.
“I would be better off closing down the pub and converting it all into beds,” he said.
Mannion also recently bought one of his freeholds from Punch Taverns. “At least they had the decency to sell off the freehold unencumbered to the tenants,” he said.
He added that he would consider buying Enterprise out of the agreement. Enterprise said it would try and resolve the situation amicably but an injunction to enforce the tie remained an option.
It's believed to be the second time one of Enterprise’s tenants has acquired their freehold on a sale and leaseback basis.
Entrepreneur Paul Rigby side-stepped Enterprise by buying the Palmerston in East Dulwich at auction for £986,000 in October last year. Enterprise now pays Rigby £65,000 per annum in freehold rent — £21,000 more than the £44,000 he pays the company in dry rent.
Brian Mannion is arguing his case under the EU block exemption, which grants some commercial agreements, including the tie, an opt-out from competition law.
He believes that the sale and leaseback has created an “artificial ownership construction”, which exempts him from purchasing obligations after five years — his original agreement with Enterprise dates back to March 1999.
However, Enterprise does not believe he has a valid case.
