A franchise by any other name? Tenancy arrangements in the pub sector

Recent changes in ownership and consumption patterns within the market have brought many operators to follow strategies that are more concerned with a retailing orientation. Many of the companies operating pubs are aiming to grow sales, and respond quickly to changes in consumer tastes and fashions. They no longer own brewing facilities and frequently control whole estates of the pubs that are marginal, and where the actions, skills and motivations of local unit managers are crucial for the success or failure of the property. The exploration of different forms of indirect control via tenancy and lease arrangements is recognition of the need to provide more entrepreneurial incentives for those managing these more marginal properties. In many ways, it is possible to view pubs owned by chains operated through both tenancies and leasing as a form of franchising. Certainly the literature and research of franchising hospitality services can help inform a study of leasehold and tenanted relationships in licensed retailing. Franchising in licensed retailing is almost wholly based on the tenanted/leased agreements, which stem from the ‘tie’. This paper argues that in the more retailing and service quality competitive environment pub operating companies will need to use more traditional franchising approaches than have been practised in the past.