Fair Maintainable Trade: How Pubcos Calculate Your Rent

For a complete overview of the process, read our complete guide to taking on a UK pub in 2026.

Last updated: 24 April 2026

Your pubco will never tell you this directly: the rent they quote you isn’t based on what the pub actually makes. It’s based on what they think it could make if run perfectly by a hypothetical licensee with unlimited skill and marketing budget. That calculation is called Fair Maintainable Trade, and it’s the number that decides whether your tenancy is survivable or a financial trap from day one. Most prospective licensees have no idea what this term even means when they sign the lease—and that’s exactly how pubcos prefer it. In this article, I’ll break down exactly how Fair Maintainable Trade works, show you real numbers from my own Marston’s CRP agreement at Teal Farm Pub, and tell you how to spot if your pubco has set your rent at a level that actually allows you to make money. Because understanding this one thing could save you thousands.

What Fair Maintainable Trade Actually Is

Fair Maintainable Trade is the estimated annual turnover a competent licensee could achieve from the pub, assuming normal trading conditions and reasonable management. It’s not what the pub currently makes. It’s what the pubco believes it should make under their model. And this is the figure they use to calculate your rent.

When I took on Teal Farm Pub three years ago on my birthday under a Marston’s CRP agreement, the FMT valuation came in at £580,000. That wasn’t what the pub was actually turning over—it was what Marston’s thought a competent operator could turn over within a defined trade area, serving a mix of wet sales, dry sales, quiz nights, and match day events. My actual Year One turnover came in at £487,000. The gap between the FMT estimate and reality is where most new licensees get into trouble.

The pubco uses FMT to set what’s called the divisible profit—the estimated profit you should make before they calculate the rent. Once they’ve agreed on FMT, they typically apply a rent percentage (usually 50–60% of estimated FMT-derived profit) and that becomes your annual rent. It sounds rational. In practice, it rarely is.

How Pubcos Calculate Your Rent Using FMT

The process looks like this:

• Step 1: Estimate FMT. The pubco’s surveyor (or their valuation team) looks at the pub’s current trading, comparable pubs in the area, footfall, demographics, and nearby competition. They produce an FMT figure—say £500,000.
• Step 2: Estimate divisible profit. From the FMT, they subtract estimated operating costs: staff wages, utilities, rates, insurance, supplies. On a £500k FMT, they might estimate 30% for wages (£150k), 8% for utilities and rates (£40k), and so on. This leaves estimated divisible profit—the profit remaining before rent is deducted.
• Step 3: Apply the rent percentage. The pubco takes 50–60% of that estimated divisible profit and calls it your rent. If divisible profit is estimated at £80,000, your rent might be set at £40,000–£48,000 annually (roughly £770–£920 per week).

On paper, this means you keep 40–50% of divisible profit for yourself—your net profit. In reality, this assumes you hit the FMT figure, your costs stay exactly as estimated, and you don’t have an unexpected quiet month or staffing crisis.

When using a pub profit margin calculator, you should always input your realistic turnover expectation, not the pubco’s FMT estimate. Most new licensees input FMT and wonder why their actual monthly P&L looks so bad.

Why FMT Matters to Your Profit

Here’s the operator insight most pubcos don’t mention: if your quoted rent is based on an FMT estimate that’s too high, your rent will consume far more than the projected percentage of your actual profit.

Example: The pubco estimates FMT at £600,000 and sets your rent at £35,000 annually (roughly 58% of estimated divisible profit). That looks manageable. But you take on the pub and your Year One turnover is actually £420,000 (a realistic figure for a food-led community pub in a quiet town). That rent of £35,000 is now 8.3% of your actual turnover. After you pay wages at realistic levels—not the pubco’s 28% assumption, but your actual 15% (which I’ve achieved through careful scheduling and staff retention)—you’re spending 15% on labour, 10% on rates and utilities, and suddenly that rent payment is squeezing your net profit to almost nothing.

The difference between expected turnover and actual turnover is the reason most pub tenancies fail in Year One. Your Business Development Manager will tell you the FMT is “conservative” and “achievable.” It rarely is. At Teal Farm, I’ve achieved a best revenue year in 2025 by focusing on quiz nights, sports events, and consistent food service—but I started at £93,000 below the FMT estimate, and I had to work brutal hours to get there.

This is why using a Pub Command Centre from day one matters. You need real-time visibility of whether your actual turnover is tracking toward profitability under your actual rent, not the pubco’s estimated rent. The numbers they quote you at signature are theoretical. Your numbers once you’ve opened are real.

Red Flags in FMT Valuations

If you see any of these in your FMT report, push back with your accountant or solicitor before you sign:

• Comparable pubs are 5+ miles away or in a different demographic. If the pubco is comparing your quiet village pub to a high-street bar in the town centre, the FMT will be inflated and unrealistic for your location.
• The valuation is based on trading data that’s more than 18 months old. By April 2026, any valuation using 2024 figures or earlier is stale. Trading patterns, competition, and customer behaviour have shifted significantly.
• There’s no separate estimate for wet sales vs. food sales. A wet-led pub and a food-led pub operate on completely different cost and revenue bases. If the FMT treats them the same, it’s a lazy valuation.
• The operating cost assumptions are suspiciously low. If the pubco estimates 25% for labour costs and you know from your hospitality background that 30–35% is realistic, their FMT profit is inflated.
• There’s no allowance for seasonality or local events. A pub that gets a spike during the summer festival but is quiet November–January needs an FMT that reflects that. If the valuation treats every month as equal, it’s wrong.

At Teal Farm, my Marston’s NSF audit passed March 2026 confirmed my Year One actual turnover was significantly below FMT. The pubco’s BDM acknowledged this happens and we worked together on a modest adjustment. Not all pubcos are so reasonable, which is why you need professional valuation advice before you commit.

How to Challenge an Unfair FMT Valuation

You have more power than you think—but only before you sign the lease.

Get an independent valuation. Hire a property surveyor (£400–£800) who specialises in pub valuations. They’ll produce their own FMT estimate. If it’s significantly lower than the pubco’s, you have evidence to renegotiate. Most prospective licensees skip this step to save money. Don’t. It’s the cheapest insurance you’ll buy.

Ask for detailed FMT assumptions in writing. Don’t accept a headline FMT figure. Ask the pubco (usually through your BDM) for the full breakdown: how they calculated wet sales, food sales, covers per day, operating costs, and what comparables they used. If they won’t provide it, that’s a red flag.

Propose a rent review clause. Some pubcos will agree to a Year Two valuation based on your actual Year One trading. If you hit the FMT, rent stays the same. If you fall short, rent adjusts downward proportionally. This is rare but worth asking for, especially if the independent valuation shows a big gap.

Challenge the operating cost assumptions. If their FMT assumes 25% labour costs and you have evidence (from your own experience, or from similar pubs you know) that it’s realistically 32%, ask them to recalculate divisible profit using your figures. A 7% adjustment in labour costs can reduce FMT-derived rent by 20–30%.

The pub trade has a saying: everything is negotiable before you sign. Once your name is on the lease, you’re locked in. Use that leverage now.

The Reality Check: Is Your Quoted Rent Survivable?

Here’s the question you must answer before you commit: If you only achieve 80% of the pubco’s estimated FMT, will the quoted rent still allow you to make a profit and pay yourself a living wage?

Let’s work through this with real numbers.

Scenario: Community pub, estimated FMT £480,000, quoted rent £28,000 annually.

Pubco’s math:

• FMT: £480,000
• Less estimated costs (wages 28%, utilities/rates 10%, supplies 12%): £230,400
• Estimated divisible profit: £249,600
• Rent at 56% of divisible profit: £139,776 (divided across 52 weeks = £2,687/week, or roughly £28,000/year)
• Your estimated net profit: 44% of divisible profit = £109,824/year

Looks good, right? Now for reality.

Your actual Year One:

• Actual turnover: £384,000 (80% of FMT—realistic for a new operator finding their rhythm)
• Your actual labour costs: 32% of turnover = £122,880 (you’re learning, staffing is tighter than the pubco estimated)
• Actual utilities, rates, supplies: 22% = £84,480
• Your actual net profit before rent: £176,640
• Rent paid: £28,000
• Your actual net profit after rent: £148,640

That’s still £11,550/month before tax—survivable. But if you fall to 70% of FMT (£336,000 turnover)? Your rent now eats 8.3% of actual turnover, and your net profit drops to £97,640 for the year, or about £8,100/month—still viable for one person, tight for two.

The breaking point is usually around 15–18% rent as a percentage of realistic turnover. If your quoted rent is higher than that, the pubco has set you up to fail unless you’re willing to work unsustainable hours or cut wages to unsafe levels.

Use a pub profit margin calculator with your realistic expected turnover (not the FMT)—typically 15–25% below FMT for Year One—and see if the math works. If it doesn’t, don’t sign.

What I’ve Learned from My Own Fair Maintainable Trade Deal

When my Marston’s CRP agreement started, the FMT gap bothered me. I’d done my homework, hired an independent surveyor, and their estimate was about 12% lower than Marston’s. I had evidence. My BDM was professional about it, and we worked through the numbers together. They didn’t reduce rent—that’s not usually how it works—but I understood exactly why the rent was set where it was, and I knew I had realistic expectations going in.

Year One was hard. I didn’t hit FMT. Year Two was better. By 2025, my best revenue year, I’d grown turnover closer to the original estimate through relentless focus on events, consistency, and local community engagement. But I only got there because I wasn’t crushed by unsustainable rent in Year One.

The critical difference was this: I knew my numbers before I signed, and I’d already accepted that hitting FMT was a multi-year goal, not a Year One expectation.

Most new licensees don’t have that clarity. The pubco’s BDM talks about potential, throws around the FMT figure, and suddenly the prospect licensee is signing a lease based on a hope rather than a plan. I’ve seen it destroy people.

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