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    3 Replies Latest reply on Jul 6, 2009 8:37 PM by RanksIntl

    partnership in a newly established business!

    Rainbow_002 Newbie
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      Hi Fellows,
      I need your kind and professional suggestions regarding the business in NYC
      that I'm about to jump in.

      I have a college friend who has been into convenient store business for more
      then five years and he has been making good profit out of his couple of stores.
      I had talked to him a while back that I'd be interested in partnership opportunity
      if you open up another store which he said he would open in near future.

      He recently found a spot, obtained lease, done
      construction/renovation to suite the store needs, and put the inventory in as
      well. He opened the store less then a month ago. The reason he didn't involve
      me from the beginning is that another friend of his was supposed to be partner
      who had to back out for some reason and that's why I was informed and I showed
      interest.
      I requested few days so I can come to the store for a couple of hours to see
      area/customers/ business etc... and so far I like it. The daily sale is not too
      bad for the new shop. The deal just to understand and is an example: is that he
      spent for example, 30K in renovating the store and 70k for the inventory. He
      said I can join by giving him half of the amount he has spent which is 50k
      however at the time we come to the agreement, we'd do inventory again and split
      the share accordingly.

      I would like to find out how best we can make this transaction and how would
      the transition go? Should I ask him to add my name into all the relevant paper
      work like, store lease, corp/llc , etc.... I need to find out more from him
      whether the business is under corporation....I assume if my name is added to
      the corporation as a 50% shareholder that would take care of all the areas
      where I'd have to worry about my name being present such as utility bills,
      lease, contracts with vendors etc...?

      Also, I'm required to pay my 50% share upfront and that would be in form of
      cash/check. In this scenario, can I get any loan if so, how?

      Is there anything else that I should know before I finalize the agreement?

      I hope the picture is clear if not, I can explain.

      I would really appreciate your feedback!
        • Re: partnership in a newly established business!
          riskman1 Wayfarer
          Not knowing the realtionship, makes this hard.....
          As always consult your lawyer, and in regrds to the leases etc..... if you do not need to be listed dont( protects you if you fold)
          However the assets that are purchased for the store coolers inventory etc...... if the money you are paying covers that them yes put your name on the paperwork ( so it cannot be taken away later)
          What happened to the other guy? what went wrong?
          Who is going to work the store? you the partner etc.....
          Get it all striaght up front!
          Years ago I tried what you are trying to do and the partner never quit his day job I worked 18 hrs a day and we never agreed on a salary.... Nad if none was left at the end of the week? I got NOTHING!!!

          Caution......
            • Re: partnership in a newly established business!
              Rainbow_002 Newbie
              Thanks *riskman1*!
              +As always consult your lawyer, and in regrds to the leases etc..... if
              you do not need to be listed dont( protects you if you fold)+
              Makes sense. I'll check out once I have a chance to look at the documents and would consult with lawyer as well.

              The other guy couldn't according to the owner was trying to get in with little money and pay the remaining amount after he earns that from the store the point that he never brought up in the begining. This is of course unacceptable for this kind of partnership.
              There'll be two shifts and I'll work one shift and my partner or his relative (employee) would be working the other shift with all together 4 employees including the owners. I can already foresee that I'll have to put a lot of hours which I'm willing to do so if it pays off down the road.

              So the only tricky part which I'm still not sure of is that the owner says, that we'll both not be drawing out any money out of store and what ever the profit is, we put that in the store for next 6-8 months. I told him that I would need salary to take care of other expenses upon which he said, in that case we can draw out equal amount but that should still be minimal. Does this make sense?
              His theory is that the business requires a lots of work and more stuff needs to be added and rather then putting in more cash from our pockets, use the profit for the same...