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    2 Replies Latest reply on Oct 15, 2009 2:22 PM by DomainDiva

    Business Partnership Divorce

    CoffeeCo Newbie
      My business partner and I are in the process of opening up a coffee shop and we have recently concluded that in order to maintain a friendship in the future, it is better to end the business relationship/partnership asap. We have different personal plans for the future and the future plans of the business itself and therefore feel that it is better to end the partnership before it has really began rather than find out six months or a year down the road. The business has not yet opened its doors, but almost all of the capital investment has been contributed equally by the both of us. We have both contributed 15K into the business as well as a small bank loan for some equipment. We were in the process of writting up a partnership agreement but could not agree on the terms (also a reason that we have decided to go our seperate ways). We are also both designers and have done all of the design work for the business. I have done all of the architectural work and he has done all of the graphic design work and branding. We have also both put in over three months of work on the construction end of the project, as we have done all of it ourselves (carpentry, painting, landscaping, etc.). We are in the process of trying to work out an agreement that we are both satisfied with and can both benefit from in the end. It seems to me that the most logical way to work things out would be for my partner (who is going to continue to own 100% of the business) to pay me back the 15K invested with interest (as if I were any other investor in the company). And on top of that I bill him for my design contributions and construction efforts over the past few months. This way I feel compensated for my efforts over the last few months and at the end of the day he gets to benefit from being sole proprieter of the business. I guess I would like to know if this is a reasonable proposition or if I should be compensated more based on the expected gross profit of the business, etc.? I am new to the small business world and I would just like for both of us to get a fair deal out of this while also maintaining a friendship.


      Thank you for your advise, it is much appreciated.
        • Re: Business Partnership Divorce
          bm911tax Adventurer
          In my view, it's certainly sound reasonable. But in many instances when 2 friends try to form a business a more sensitive approach is taken. What I mean is; the money is usually secondary concern, and the feelings, emotions, and sociological approach to the situation is the primary. So as long as you and your friend is happy with this arrangement and you both will remain friends... (you can finish the sentence :o)
          • Re: Business Partnership Divorce
            DomainDiva Ranger
            Whenever two people contribute 'sweat equity' plus money into a partnership that goes south, the monetary value of the sweat equity may not be recoverable. Since you were unable to complete a partnership agreement that would have addressed the issues that you are now trying to sort out, you may be fortunate if you receive your 15000.00 back. Try to do this without an attorney. Your partner may be less inclined to cooperate if you bill him for your design services.