Critical Questions to Ask Your BDM Before Signing

Last updated: 24 April 2026

Most prospective pub licensees treat their BDM meeting like a social visit when it should feel like a cross-examination. Your Business Development Manager works for the pubco, not for you — which is the first uncomfortable truth you need to accept. I signed my Marston’s CRP agreement three years ago, and the questions I didn’t ask cost me more than the ones I did.

Taking on a pub tenancy is a financial and personal commitment that will consume your time, mental health, and bank account for years. The pubco’s job is to present the opportunity. Your job is to punch holes in it. This article walks you through the exact questions that separate a realistic opportunity from a financial trap — the ones only someone who has actually run a pub under a tenancy agreement would think to ask.

You’ll learn what to push back on, what numbers never add up the way they’re presented, and what happens when you sign without understanding the full picture. This is the conversation your BDM won’t volunteer, but you need to have it anyway.

The Questions About Rent and Valuation

Question 1: What is the Fair Maintainable Trade valuation based on, and what assumptions did you use to reach it?

This is the core number your rent is built on. Fair Maintainable Trade (FMT) is the pubco’s estimate of what a competent licensee can achieve in a typical year, stripping out one-off events and assuming normal trading. It’s not a promise. It’s a calculation. And it’s often generous.

Your BDM will give you a figure — let’s say £400,000 FMT. But on what basis? Did they assume:

• Four staff on every shift, or two?
• Food service five days a week or seven?
• £8 average spend per customer or £12?
• Capacity utilisation at 60% or 80%?

Get them to walk you through the calculation line by line. If they can’t or won’t, that’s a red flag. I pushed for this when I took on Teal Farm, and found their FMT assumptions included catering events three nights a week — something the previous licensee had never actually run. The pub is community-focused, 180 covers, and that’s not the right model. Their valuation was disconnected from reality.

Question 2: What was the previous licensee actually trading at, and when did they leave?

This is where confidentiality becomes a convenient shield. Your BDM won’t hand you the previous licensee’s P&L — but they should tell you the trading level they actually achieved. If the previous licensee left last month and was trading at £300,000, and your FMT is £420,000, you’re being asked to assume a 40% jump immediately. That’s not realistic.

Ask how long the previous licensee was in place. One year? Five years? If they’ve cycled through three licensees in four years, the problem isn’t usually the licensee. It’s the site.

Question 3: How is the rent calculated from FMT, and what margin does the pubco take?

Typically, rent is roughly 50% of FMT, but this varies. If FMT is £400,000 and rent is £220,000, that’s 55%. Ask your BDM to confirm the exact percentage and how it’s justified. Also ask: Does the rent increase annually, and if so, by what mechanism? Is it RPI? A percentage of turnover? A fixed amount? This matters enormously over five years.

Question 4: Can I see comparable rents for similar pubs in your estate?

This is a pressure test on whether your rent is reasonable. A comparable pub in the same town, same capacity, same format should be paying roughly the same rent. If yours is significantly higher, ask why. Pubs are not all the same, but there should be logic and precedent.

Questions About the Tied Agreement and Margins

Question 5: What is my gross profit margin if I buy exclusively from you?

The tied agreement is the deal-breaker for most prospective licensees, and for good reason. You must buy beer, cider, soft drinks, and often wine and spirits from the pubco at their prices. This is how they make money when rent doesn’t cover their costs.

Ask your BDM: What gross profit margin can I achieve if I buy exclusively from you? On wet sales, what is the expected GP%? On food, on soft drinks? If they say “around 60% wet margin,” that means for every £100 you sell in beer and cider, you keep £60. The other £40 is the cost of goods sold to the pubco.

Cross-reference this against industry benchmarks. UK pub wage cost benchmarks also give you gross profit guidance — wet-led pubs typically trade at 60–65% gross profit if buying from a pubco at tied prices. Food margins are typically 55–65% depending on the format.

This is where my honest answer matters: At Teal Farm, I achieve 15% labour costs against the UK benchmark of 25–30%. That efficiency only works because my gross margins are clean. If the pubco’s cost of goods undercut my margins, I’d be locked into a losing model. Ask for this detail in writing.

Question 6: What am I allowed to buy away from you, and what penalties apply if I don’t?

UK pub tenancy law allows you to buy beer and cider from a free-of-tie supplier if you pay a “guest beer fee.” Typically this is a percentage of turnover from the guest products — say 2–4%. Ask your BDM:

• What is the guest beer fee?
• How many guest lines can I have?
• What about soft drinks, wines, spirits?
• What penalties exist if I breach these terms?

Some pubcos will allow you to source soft drinks or coffee independently. Others won’t. Some tie spirits. Know exactly where the boundary is before you sign. This directly affects your profitability.

Question 7: What happens if I can’t hit the margins you’re projecting?

This is blunt, but necessary. If you trade at 55% gross margin instead of 60%, your profit disappears. Ask: What support does the pubco provide if margins slip? Do they review your trading? Will they reduce rent if you fall short? What conversations happen at three months, six months, if you’re struggling?

The answer will often be silence. Pubcos don’t usually reduce rent voluntarily. But you need to know that upfront.

Questions About Support and What Goes Wrong

Question 8: What does pubco support actually look like, and how quickly do they respond to problems?

Most pubcos offer support on paper that doesn’t exist in practice. Your BDM will promise training, stock management, marketing support, HR advice. Ask specifically:

• Who is my point of contact if something breaks down operationally?
• What is the response time if the cellar equipment fails?
• Do you provide free training, or is it chargeable?
• If I have a staff dispute, do you provide HR support or guidance?
• How often do area managers visit, and what do they review?

Then ask for examples of how they’ve helped a current licensee in the last six months. Vague answers mean vague support.

Question 9: What happens if the pubco’s supply chain fails — stock shortages, price shocks, quality issues?

This is recent and relevant. Supply chain disruptions happen. If the pubco can’t supply a core product — say, they lose a keg beer supplier — what’s your recourse? Can you source elsewhere temporarily? Do they compensate you for lost sales? What’s the protocol?

Ask about pricing too. If the pubco increases beer prices 20% mid-contract, do you have to accept it, or can you challenge it? What protections exist?

Question 10: What is the complaint procedure if I feel the pubco isn’t supporting the agreement fairly?

This is your exit strategy if things go wrong. The Pubs Code regulates tied pub agreements and there are dispute resolution routes, but you need to know them. Ask your BDM if the pubco operates a formal complaints process, and whether they’re subject to the Pubs Code Adjudicator. Most are. Know your rights.

Questions About Finance, Cash Flow and Exit

Question 11: What are the total ingoing costs, and what do they cover?

Ingoing costs are rarely presented as a simple figure. You’ll have stock purchase, fixtures and fittings, decoration, legal fees, training, deposits. Pub tenancy ingoing costs vary wildly, but you need a full breakdown:

• Stock valuation (how much you’re buying in initial inventory)?
• Deposit or security (how much, refundable when)?
• Key money or premium (if applicable)?
• Dilapidations reserve (if required)?
• Legal and survey fees (who pays)?

Ask whether any of these are negotiable. Some are. Most aren’t.

Question 12: What exactly is my responsibility for dilapidations and repairs?

This is where exit costs get ugly. A dilapidation is damage or deterioration beyond fair wear and tear. If you leave the pub and the building needs roof repairs, who pays? What about internal decoration, kitchen equipment, the cellar?

Your lease will specify, but your BDM can walk you through the practical reality. Some pubcos are strict. Others are flexible. Understanding this now prevents a five-figure bill when you leave.

Question 13: What are the break clause terms, and what notice period applies if I want out?

Most pub tenancies don’t have break clauses. You’re locked in for five or ten years. If you want to leave early, you need the pubco’s consent. Ask:

• Can I assign the lease to someone else, or must I negotiate surrender?
• What notice period do I need to give?
• Can I leave if I’m not hitting financial targets, or am I locked in regardless?

If there’s no break clause and no clear exit route, you’re signing a very long contract with very few options. That’s a huge risk if the pub underperforms or your personal circumstances change.

Question 14: How frequently is rent reviewed, and on what basis?

Most tenancy agreements include rent review mechanisms — typically every three years. Ask what triggers a review: RPI? A professional valuation? A percentage of turnover? If it’s a full revaluation, your rent could jump significantly if the pub has traded well. This is why calculating your pub profit margin accurately matters — growth in turnover can trigger rent increases you weren’t prepared for.

Questions About the Specific Site and Trading Reality

Question 15: Why is this pub available, and what happened to the previous licensees?

This is the one question that often reveals the truth. If a pub has been through four licensees in six years, something is systematically wrong. It might be the location. It might be the pubco’s support. It might be unrealistic financial expectations baked into the agreement.

Ask directly: Why did the last licensee leave? How long did they last? Did they underperform the FMT? Get specifics, not platitudes.

Question 16: What does the local market look like, and who is the competition?

Your BDM should have demographic and competition data. Ask:

• How many pubs are within 500 metres?
• What is the catchment population and age profile?
• What are the footfall counts on the high street?
• Who are the nearest competitive pubs, and what’s their format?

Then visit those competitors yourself and buy a drink. See how busy they are. Talk to other publicans if you can. Your BDM’s market analysis should match the reality you observe.

Question 17: What investment or refurbishment does the pub need, and who pays?

Some pubcos hand you a tired pub and expect you to invest. Others contribute. Ask whether any refurbishment is planned before handover, and if the pubco will contribute. If they won’t, and the pub needs £15,000 of work, that’s part of your ingoing cost. Budget for it.

Question 18: How much revenue is realistic in Year One, and what’s your confidence level in that figure?

The FMT is theoretical. Real trading in Year One is usually lower due to bedding-in time, staff changes, and the fact that you’re learning the business. Ask your BDM what Year One revenue they’d actually expect, and be sceptical of anything above 70% of FMT. This is where calculating whether a pub is profitable before you sign becomes critical — if Year One revenue is 70% of FMT and rent is based on 100%, you’re immediately cash-flow negative.

The Questions BDMs Hate But You Must Ask Anyway

Question 19: Can you introduce me to three current licensees who will speak honestly about their experience?

This is the test. If your BDM can’t or won’t, that’s a warning sign. Ask them to put you in touch with three licensees in similar pubs — ideally ones who took over in the last two years. Then contact them independently and ask:

• Is the FMT realistic?
• Are the margins as promised?
• Does the pubco support you when things go wrong?
• Would you do it again?
• What would you do differently?

If they’re honest with you, you’ll get a much clearer picture than your BDM can provide. Most will be frank if you buy them a drink and ask respectfully.

Question 20: What is the worst-case scenario, and what happens then?

This is the conversation that separates realistic planning from fantasy. Ask your BDM: If the pub trades at 60% of FMT instead of 100%, what happens to my rent obligations? Do I still owe the full amount? What support do you provide? What conversations happen with me, the accountant, the bank?

The honest answer from most BDMs is: You still owe the rent. That’s the commercial reality of a tenancy. So the question becomes: Can you afford the rent if the pub only achieves 60% of FMT? If not, this isn’t the right opportunity for you.

The most effective way to protect yourself before signing a pub tenancy is to demand clarity on three specific financial outcomes: your gross profit margin based on tied pricing, your actual annual profit after all costs at 70% of FMT, and your monthly cash position in months one through six. Most BDMs will struggle to provide these in writing. That’s the answer you need.

Setting Yourself Up for Success Before You Sign

I’ve run Teal Farm for three years under a Marston’s CRP agreement, passed my NSF audit in March 2026, and achieved my best revenue year in 2025. But I made the right calls because I asked difficult questions upfront and got detailed answers in writing — not just from my BDM, but from my accountant, my solicitor, and other licensees I trusted.

Your BDM is a salesperson. That’s their job. Your job is to strip the marketing away and understand the financial reality. If you can’t make those questions stick — if your BDM deflects, refuses to engage with detail, or promises generic support without specifics — that’s a sign the opportunity isn’t solid enough.

The best protection before you sign is financial clarity. You need to know three things with certainty: your ingoing costs, your annual rent and how it’s calculated, and your realistic gross profit margin after you pay the pubco’s prices. If your BDM can’t give you those numbers in writing, walk away. The pubco will find another licensee. But you’ll keep your money and your sanity.

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