Any resources I can look into regarding my one-sided partnership agreement. I trusted my partner fully and signed it…much to my chagrin now. Long story short, business is breaking even and my partner (money guy) wants out and he wants all his money he invested. roughly 750k. He is willing to hold note but he his putting unreasonable provisions together for default issues that may arise. I feel he may want to set me up for failure. Anyway, I have been the one working 70-75 hours a week…it’s my family name on restaurant and he has never worked a single hour in the rest. Been open with two locations for 19 mos. Any advice on how to deal with a manipulative wolf in sheeps clothing? BTW, it was his long-time friend who has been doing the book-keeping and they are a complete and utter mess. I have showed P & L’s and balance sheets to banking institutions and investors, and laughed out the door. we gross about 1.8m a year…payroll and food costs hold steady at 60-62%. I’m getting screwed somewhere…help. I will be happy to answer any questions I may have missed.
He’s invested 750K?? Have you actually confirmed this? Depending on where you’re at a decent attorney will charge 200-300 per hour and need at least a 5K retainer, probably more. Sounds to me that your partner will be SOL if you walk, so maybe you need to call his bluff. He’s got three quarters of a million tied up, while you have 18 months of your life(which you should have been paid for). Sounds like you have him by the nuts, not vice versa. Lay out your offer to buy him out, or your offer for him to buy you out. See where the negotiations bring you.
So you dont know if the business is making money and if it isnt why that is the case?
Geez I dont know how I could be a partner and not know COMPLETELY where every single penny is going period.
This “partner” has the idea that an investment in a small buisness is similar to a money market, and he is mistaken.
I imagine for two locations breaking even with sales you have would fetch 300k maybe…of course depending on what potential is seen by a person interested.
To me the bigger issue is with those kind of sales how are you not making money?
If you are working 70-80hrs a week and are doing a job of an hourly employee AND you are running high labor, that is a bigger problem than this guy and his demands.
Get your hands around the profitability of the business and if your “partner” tries to heavy you, tell him you can either work TOGETHER to understand what this is and isnt, OR you can place the biz for sale and he can earn pennies on his dollars.
I still cannot understand 1.8M in gross running those kind of gross margins and even with that, not making money.
Has he paid himself back at all, where the hell is the money going and why are your percentages so terrible?
Something odd is going on. As others have stated, if you are doing 1.8 million your costs are too high and the money is going somewhere.
- Hire an attorney. Get some advice.
- Learn your business. You should know those numbers.
Not knowing what you signed, it is hard to say more, but if the “partner” is an “investor” and not a “lender” the poster above that stated you have him by nuts, not the other way around is right. Just make sure you are are not getting screwed by the book keeper. You should be earning a market wage for your work and there should not be ANY gauranteed return to the “partner”.
Hey…for $750,000 and all kinds of grief…simply hand him the keys and watch the price drop like a rock…
you risked your time and effort he risked his money…but deals can go south…and there are two sides to every pancake…
don;t worry about the name…that is meaningless…simply tell him the price is too high for your to work 75 hours a week for life…and hand him the keys…it didn;t work out as planned…most don;t…
you can get a job anywhere…and work less and make more money…
been there …give him the keys on Monday…
SAL
It’s so hard to walk away from something I have worked so hard for.
Just threaten to walk and he’ll cave. He can’t afford to have you walk from his $750,000. If he can’t run it, he ends up selling for pennies on the dollar.
t
Oh yes it is…I agree…been there…I don;t know if you are married or have a family…but walk away for their sake if not yours…
Are all IRS tax payments etc…been made…??
SAL
ALso if you wish…line up a straw man…he goes in and buys the business then sells it right to you…
DO this…give your two weeks notice…then let him decide what he’s going to do…
SAL
Get an attorney that does small business/contract law BEFORE you do any of this. Get some professional advice based on facts before following any of this advice. I think you will find that the advice is good, but check first.
Hire an accountant on your own to go over the books and see if what your partner’s friend has been reporting to you is accurate. If he is inept, the numbers might be wrong. If he is dishonest, he and your partner could have been skimming off the profits all along (this happened to a friend of mine). Don’t let them know this is going on; hopefully you at least have copies of all documents. Sorry if it sounds like I distrust people, but my friend was so deep in the hole after he bought out his partner that the business only lasted for another six months and all he had left after 12 years was a mountain of debt.
P.S., I’ve never heard of a partnership agreement where one party can demand full payment of their initial investment at a moments notice regardless of how the business is performing. Partners generally assume part of the risk of opening and operating the concern. If this is how your agreement is written, it is a prime example of why people should have an independent attorney review such agreements before signing them.
hire an attorney and accountant and go over your books and partnership agreement and to see what your rights are. Do not sign any other agreement with your partner until you find out your rights. How he can demand and be dispersed cash should be covered in your partnership agreement, if it’s not it would be covered by laws in your state. normally an investment isn’t something thatyou can demand back, especially the full amount that you invested since it may have be lost, a risk of investment. With out knowing the specifics of you situation all we can really do is offer generalities. It all boils down to the contract between you two and state/fed laws.
PM
This is some great advice here. You need to be realistic about what could happen to you, which I believe you are from the little you wrote. You must get all legal documents to one of the best attorney’s in your area and pay them what they are worth to check over your documents. He may see some frivolous activity from your partner and may represent you with no money down to go after some rich guy screwing you over.
After the lawyer reports back to you is when you should make a decision to run or fight the SOB. If he tricked you in to signing your life away, you better deal with it but only through an attorney, not face to face with that creep.
Do you know what a $1.8 million pizzeria is worth with excellent profit MARGINS?! WELL OVER $1 MILLION!. The profit on that gross is making me crazy but of course we don’t know how profitable you really are. You gotta know and know it fast!!