If you ask Gen Z publicans Grant Champion and Tom Auriac if they stood a chance at taking out a bank loan to purchase their pub in remote Australia, they will laugh at the suggestion.
“God no, don’t think so,” Grant says.
“Two 24 year-olds? The bank would’ve just laughed at us.”
So instead, for the past two years, the Stonehenge Hotel in western Queensland has traded on trust.
‘Country way’ deal
Every Monday, the schoolmates transferred $1,000 to the pub’s former owner, Tony Jackson, as part of an interest-free vendor finance arrangement.
“I left $120,000 in and they put their $50,000 [deposit] down and they paid $1,000 every Monday until it was all gone,” Tony says.
“Never missed, they never missed.”
The pair recently made their last payment and officially own the pub outright — an accomplishment they say wouldn’t have been possible without a deal built on mutual trust.
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“A lot of people were sceptical, thinking he might take it back at any chance,” Tom says.
“But there has to be a bit of a trust there and I think that it should be an option for more businesses if a vendor like Tony can front it and it gets a lot of people their first step into the door.
“It should be more of a common thing that people do.”
Tony has been a grazier in the region for decades, so he’s cut his fair share of deals.
“I’ve given time payments for stock and received plenty of time payments for stock too over the years, don’t worry, so it’s not something new,” he says.
But even for him, two men in their mid-20s asking to buy his bar without finance was gutsy.
“On the other hand, as great a little business as this is, we have to remember that it is at Stonehenge and not everybody wants to live at Stonehenge,” Tony says.
“So, you know, if you want to sell something and someone wants to buy it, you’ve got to meet in the middle ground there somewhere and make it all happen. And that’s what we did.”
Vendor finance not without risk
Shaun Bond, The University of Queensland’s Frank Finn professor of finance, says this arrangement speaks to the challenges of selling a business in a remote area.
“There are going to be fewer buyers, so in some ways this is a bit of an incentive to get people in there to take on this property,” Professor Bond says.
But vendor finance deals have their own challenges.
“If you have a conventional mortgage loan, then you have a full set of consumer protection about what happens in the case of default,” Professor Bond says.
“[Vendor finance] can offer more flexibility but when things go wrong, that can also be complicated.”
The seller also runs the risk of ending up with an asset that has decreased in value, for example, if the new owners lose all the pub’s customers.
Professor Bond warns to take legal advice and have a proper contract drawn up.
‘People need to have a bit more trust in one another’
For Grant, whose family has lived in western Queensland for generations, the deal wasn’t unusual.
“It might not seem like a normal thing for the city sort of people, but people in the outback always give each other hands on properties and stuff like that,” Grant says.
“I think it’s just part of the country way.”
Although Tony has known Grant’s family for decades, he says he would’ve done the same deal even if he hadn’t.
“I probably would have, I’m an in for a penny, in for a pound sort of person,” Tony says.
Tom says it’s a sign that mateship is alive and well in country Queensland.
“I think more people need to have a bit more trust in one another and just have a go and give back sort of thing,” he says.
With the deal done and the pub paid off, the young business owners say they couldn’t have done it without Tony.
“He’ll get a few cheaper beers anyway,” Grant says.
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