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Reading between the lines
Property sales reps frequently talk up the solid performance of an established licensed trade business in one area of endeavour – its food offering, for example – while suggesting there could be room to expand the area of operations into more profitable activities. However, scrutiny should be applied to a premises' operating criteria to establish exactly what it permits and prohibits, and prospective purchasers should seek advice if any doubts arise prior to purchase.
Roy Hudghton explains why…
While operating criteria can in some cases include a proviso along the lines of "subject to consent," it isn't always made clear exactly how a certain site is viewed by both the council and the licensing board, which can sometimes take very different views to each other.
Edinburgh, for example, has seen a number of high profile cases in which trade operators were accused of flouting the rules because they appeared to be circumventing contradictory regulations.
It is common to find a venue which has consent from the licensing board to operate as a public house, but from the planning wing of the council (which operates independently from the licensing board) it may have permission only to operate as a restaurant. In practice, if planning consent is given for a restaurant, the presumption is that alcohol is ancillary to the food.
To further confuse the issue, the old system of licences will finally be scrapped in 2009, when the new Licensing Act comes into force. Instead of applying for a pub licence, or refreshment licence, licensees will operate their premises according to a list of conditions approved by the licensing board. This is a radical departure from the previously accepted way of doing things, and will mean an operator has to list in exhaustive detail every form of activity he or she would like to allow on the premises – whether it's dancing or live music, gambling or sports-spectating.
One thing is certain; it won't be straightforward to amend the plan once it is drawn up, so it'll pay to get it right first time.
From February 2008, if you are acquiring a business you should study its operating plan to make sure it's in line with how you see things developing.
Until now, many restaurateurs, including those running some of the best restaurants in Scotland, have preferred to operate under a public house licence because of the freedom of operation it gives, vis-à-vis serving alcohol.
However, if a venue's current status doesn't allow it to trade in a particular way, there is no chance of gaining a licence for a plan which envisages an altogether different format.
Business life has never been more complex, and whether you are buying outright or taking on a lease, you will certainly need to know as much as possible about its operation (and local operating criteria), and, where possible, avoid bureaucratic wrangles before they ever get a chance to take root.
This article has been edited from its original version. For the complete feature, please see Catering in Scotland magazine November/December 2007.
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