Licenses and management arrangements
In the licensing trade, the distinction between tenancies, licenses and management arrangements can sometimes become blurred and result in potential legal issues. We were instructed recently by a client in connection with a hotel/restaurant transaction where there appeared to be some confusion as to the structure of the deal and whether the client was in fact acquiring the business or merely operating the business under a management arrangement.
There were as a result real implications in terms of the nature of their occupation of the premises and hence potential breaches of covenant under the pre-existing brewery lease. Careful negotiation and structuring of the arrangements were required to ensure that our client was not left exposed and did not end up effectively paying for a business it wouldn’t ultimately own.