What a Pubco Agreement Actually Means for You

Last updated: 2 May 2026

Most people think a pubco agreement is just about buying beer at their prices — but it’s actually a lease, supply contract, and operational handbook rolled into one legal document that will govern every significant decision you make in your pub for the next 3 to 20 years.

If you’re seriously considering taking on a tied pub, you’ve probably heard terms like “Marston’s CRP,” “wet rent,” and “minimum purchase requirements” thrown around — and felt completely lost trying to work out what any of it means for your actual bottom line.

I took on Teal Farm Pub in Washington three years ago under a Marston’s CRP agreement, and in that time I’ve navigated the ingoing costs, NSF audits, BDM relationships, and the full financial reality of running a tied community pub. We achieved our best revenue year in 2025, but that success came from understanding exactly what I’d signed and planning for it.

This guide walks you through what a pubco agreement actually is, what it costs beyond the headline monthly fee, what you can and cannot control, and the real questions you need answered before you sign anything.

What Is a Pubco Agreement?

A pubco agreement is a lease and supply contract that ties you to a pub company (or brewery) for the property, your beer and spirits supply, and pricing control for a fixed term — typically between 3 and 20 years. It’s not just a rent agreement; it’s a complete operational framework.

When you sign a pubco agreement with a company like Marston’s, Greene King, Star Pubs, or Heineken-owned operators, you’re agreeing to:

• Pay rent for the property (the pubco owns it)
• Buy all or most of your beer, lager, cider, and sometimes spirits from them at their set prices
• Maintain minimum purchase volumes
• Allow them approval over major operational changes
• Use their approved EPOS systems and payment processors
• Submit to regular audits and inspections

In return, you get a ready-made pub property, brand support, BDM (Business Development Manager) support, training, and a predictable supply chain. The pubco bears the property costs and risk.

The alternative is a free-of-tie lease, where you own or lease the property independently and buy from whoever offers the best price — but you take on property risk and find your own supply partners.

How a Pubco Agreement Works in Practice

On the day you take over a pubco pub, you’ll have an ingoing meeting with the outgoing licensee, the pubco’s BDM, and often a surveyor. They’ll hand you the keys, the EPOS system (usually theirs), a cellar full of stock, and a list of what you need to do in the first week.

Here’s what happens next:

Rent and Minimum Purchases

You’ll pay a monthly or quarterly rent bill directly to the pubco. This is called wet rent if it includes stock purchase requirements, or dry rent if it doesn’t. You’ll also have a minimum monthly purchase commitment — for example, “minimum £3,000 of beer and lager per month, non-negotiable.”

The pubco’s pricing is fixed by them. You don’t negotiate. A pint of their branded lager costs what they say it costs, and you add your margin on top. This is where the tie becomes restrictive — you can’t shop around or press suppliers for better rates.

NSF Audits and Compliance

Most pubcos conduct NSF (No Stock Fraud) audits regularly — I passed one in March 2026 across all tied lines. They’ll turn up with a surveyor, count your stock physically, check your cellar temperature logs, verify your EPOS records, and ensure you’re not diverting stock or selling unlicensed products. This happens at least once a year, sometimes more if there are concerns.

The audit verifies you’re buying what you’re supposed to buy and selling what you’re supposed to sell. It’s not optional.

BDM Support and Operational Oversight

You’ll have a BDM assigned to your pub. They’re supposed to help you with promotional support, training, new product rollouts, and problem-solving. In reality, the quality varies enormously depending on the pubco and your relationship with the individual.

Your BDM also approves major decisions: new food menus, events, staff changes, refurbishments, and changes to your opening hours. Some decisions need written approval.

The Real Costs: What You’ll Actually Pay

This is where most prospective licensees get blindsided. The headline rent figure is only the beginning.

Wet Rent

This is the rent you pay, but it’s calculated as a percentage of your turnover or a fixed monthly amount — whichever is higher. For example: “12% of wet sales or £2,500 per month, whichever is greater.” If you do £20,000 in beer and lager sales, you pay 12% (£2,400) — but if you only do £15,000, you still pay the minimum £2,500.

Margin Markups on Supply

The pubco doesn’t make money just from rent. They make significant margin on every crate of beer they sell you. A pint that costs them £0.40 might be wholesaled to you at £0.65–£0.75. You then mark it up to sell at £4.50–£5.50 to customers. The pubco’s margin is built in before you even price it.

This is why tied pubs typically struggle with competitive pricing — you’re buying at higher cost than a free-of-tie pub down the road.

Dry Rent

Rent on non-tied products (food, soft drinks, spirits you can source yourself). This is usually separate from wet rent.

Hidden and Variable Costs

Most prospective licensees don’t account for the total cost of a pubco agreement because they only see the wet rent line on the offer letter. Here are the real costs:

• VAT on supplies: 20% on top of everything the pubco supplies
• Delivery charges: Standing charges and per-drop fees if you’re a small operator
• Stock shrinkage: The pubco’s expectations are built into their calculations — if you underperform, you still pay minimum purchase; if you overstock and waste it, that’s your loss
• Approved EPOS rental or licence: Usually £30–£50 per month; refusal to use their system voids your agreement
• Payment processor fees: Card processing typically at 2.5–3.5%; you must use their approved provider
• Training and compliance: Some pubcos charge for mandatory training courses
• Audit fees: Large pubcos absorb these; some smaller ones pass them to licensees

When you use a pub profit margin calculator, you need to account for all of these, not just the rent line.

Real-World Example from Teal Farm Pub

At Teal Farm, I operate 180 covers with quiz nights, sports events, and food service. Under my Marston’s CRP agreement, my total monthly outgoings (including wet rent, dry rent, utilities, staff, and stock costs) run significantly higher than a free-of-tie operator would experience. However, by managing labour costs tightly — averaging 15% against a UK benchmark of 25–30% — I’ve managed to remain profitable.

The point: you cannot just compare the rent figure. You have to model the entire financial picture.

What You Control and What You Don’t

This is crucial, because many new licensees assume they own and run the pub — and then realise they don’t.

What You Control

• Day-to-day operations: Staff rotas, opening hours (within licence limits), daily pricing, promotional decisions for non-tied products
• Events and entertainment: Hosting quiz nights, live music, sports events — subject to licensing and noise restrictions, not pubco approval
• Food offering: Menu design and sourcing of food (though some pubcos have preferred suppliers for economies of scale)
• Staff hiring and management: Your responsibility to recruit, train, and manage your team
• Non-tied product sourcing: You can choose where to buy crisps, soft drinks, and spirits you’re allowed to stock independently

What You Don’t Control

• Tied beer and lager pricing: The pubco sets it; you don’t negotiate
• Supplier changes: If Marston’s stops stocking a product, you lose it — no alternative sourcing allowed
• Minimum purchase commitments: You must hit them every month, regardless of sales performance
• Refurbishment and alterations: Requires written pubco approval; they may refuse or demand cost-sharing
• Major operational changes: Changing opening hours, adding food service, hosting events with significant revenue impact — all need BDM approval
• Price changes on tied lines: You cannot discount tied beer to compete with the pub down the road, even if they’re free-of-tie
• Termination: Breaking a pubco agreement is extremely expensive — expect to pay penalties, break fees, and potentially be sued for loss of earnings

Critical Questions to Ask Before Signing

Before you commit to a pubco agreement, you need answers to these questions in writing. Not verbal assurances from your BDM — written, in the contract, or in a supplementary letter from the pubco’s legal team.

1. What Is the True Total Cost?

Ask for a projection of your total monthly costs based on realistic turnover for the pub. Request:

• Wet rent percentage and minimum monthly figure
• Dry rent
• Typical VAT impact
• Minimum purchase requirement and what products are included
• All fees (EPOS, payment processing, delivery, training)
• A worked example showing monthly cost for a pub hitting 80%, 100%, and 120% of projected turnover

Compare this against what a free-of-tie operator would pay using a retail partner earnings calculator. The difference is often 15–25% of your total cost base.

2. What Happens If You Don’t Hit Minimum Purchase?

Do you pay the difference anyway, or does your rent adjust? If the minimum is non-negotiable, you need to be certain your pub can hit it. Request a worked example and ask whether the pubco has ever waived minimums in economic downturns.

3. What Are the Break Terms?

Most pubco agreements run for long fixed terms (10–20 years is common). Ask:

• Are there break clauses? (Usually at 5-year or 10-year points)
• What is the penalty for breaking early? (Often 6–12 months’ rent plus lost earnings claims)
• Can you sell the business, or does the pubco have a veto?
• What happens at the end of the term? Do you have a right to renew?

4. How Are Price Increases Handled?

Ask whether the pubco can increase wet rent and tied pricing unilaterally or whether there are restrictions. The best agreements have caps — for example, “no more than RPI + 2% annually.” The worst allow unlimited increases with 30 days’ notice.

5. What Approval Do You Need for What?

Get a written list of decisions that require BDM or pubco approval: refurbishment, staff hiring, menu changes, price discounting, etc. The vagueness is often in phrases like “significant operational changes” — which is subjective.

6. What’s the Ingoing Cost?

You’ll pay for fixtures, fittings, and stock at handover. Ask for a detailed inventory and valuation. Ask whether you can negotiate the valuation (you can — the outgoing licensee’s valuation is a starting point, not gospel). Ask what happens to unsold stock if you leave early.

7. What Support Are You Actually Getting?

Is there a training programme? How often will your BDM visit? What happens if your BDM leaves or you have a conflict? Will they help with marketing, staff training, or new product launches? These vary wildly between pubcos.

Bring in a Solicitor

Do not sign a pubco agreement without having a solicitor who specializes in pub tenancies review it. The cost (£800–£1,500) is an investment that can save you tens of thousands in penalties or hidden liabilities. The pubco’s offer letter will use their standard terms, which are written to protect them — a solicitor spots the gaps.

Tied vs. Untied: When a Pubco Makes Sense

A pubco agreement isn’t inherently bad — but it only makes sense if the financial benefit outweighs the operational restrictions.

Why Choose a Pubco Pub?

• Lower upfront capital: You don’t buy the building; you lease it. Ingoing costs are typically 30–50% lower than a free-of-tie property
• Supply chain certainty: Your beer and stock are guaranteed; no supplier failures
• BDM support and brand: Marketing support, staff training, new product access
• Property maintenance: The pubco handles structural repairs and external maintenance (though you pay for internal)
• Established location: You’re taking over a proven site with existing customer base and reputation

Why a Pubco Pub Is Risky

• Higher total cost: Typically 35–50% higher operating cost than free-of-tie
• Limited flexibility: You’re bound by their pricing, their supply decisions, and their approval processes
• Long-term commitment: Breaking early is financially catastrophic
• No asset ownership: You build the business but don’t own the property; when your lease ends, you leave with nothing
• Profit pressure: Because your costs are higher, your profit margin needs to be tighter — which means higher sales or lower costs (usually staff)

The Reality Check

A pubco agreement is best suited to licensees who want to run a small, tight operation — not scale aggressively. The operational constraints and cost structure make it hard to compete on price or expand significantly.

For community pubs, quiz-focused operations, or sports bars in smaller markets, the trade-off can work. The BDM support and supply certainty matter more than price competition.

For high-volume, high-margin operations or locations where you need pricing flexibility, a free-of-tie lease is almost always more profitable — if you can access the capital and manage the operational complexity.

Getting Clarity Before You Commit

Before you sign anything, you need real-time visibility of what the numbers actually mean. Understanding the lease terms is one thing; understanding whether it makes financial sense is another.

Pub Command Centre gives you real-time financial visibility from day one — labour percentage, VAT liability, cash position, and weekly profit and loss — so you can see within the first month whether the pubco agreement was worth it or whether you’re working for the pubco instead of for yourself. £97 once, no monthly fees.

For more information, visit retail partner earnings calculator.

For more information, visit best pub EPOS systems guide.