Please help, closing store, financial mess

I would appreciate your opinion on what is a fair resolution to a closed store. About 3 years ago I entered a partnership to open a pizza restaurant. The terms were essentially that I would do all the work, but put up zero dollars in capital. I built the store from scratch, developed the menu, got it open and then operated it. I had 2 months to build the store before the rent kicked in, so I worked very hard to do so. Of course, I was not paid for that time. Ownership in the store would be split 50-50. We had agreed prior to opening that my base pay would be in the area of 40K plus ½ store profits after loan payments back to partner.

For the past year I have worked everyday, seven days per week, from open to close. In the time that we have been open I would estimate that I have worked 85-95% of the stores operating hours. It was never uncommon to work 60, 90 even 150 days in a row. The store never was able to pay me the $800 per week in agreed wages, partly due to weak sales & partly due to paying back the loans, credit card debt & leases required to open. There was never a direct cash investment, everything was borrowed. Instead I have worked for the past 3 years for $300 cash per week, no taxes. At one point I went 6 weeks without pay during a slow January. It was not our intention to pay me this way & all other employees wages are on the books, it was just another way to save money. I had/have no other source of income.

My partners are fair-minded people, but have no experience in operations. One partner managed the paperwork, bookkeeping, payroll etc… & the other helped out as best they could given their full time professional career outside of the restaurant. But in the end, except for about 10 hours per week during this past 6-7 months, I have been operating it by myself. As you can imagine, there is tremendous frustration in going to work every day & losing, every day a loser & being unable to fix anything because you can’t step out of the store without closing.

The stress of working everyday & losing money everyday became too much too overcome. I went to store, went home & slept & went back to store. Outside of 3 short trips out of town, I participated in no social activity. My entire life was the store. My partners were not pleased with my attitude or behavior. I became angrier & angrier every day.

We will be able to sell the store, but with a loss of approximately 50K. That is, 50k in assorted credit card debt & loans.
100% of the proceeds of the sale will go to my partner to pay off loans, credit cards etc… Due to everything being a loan there is no equity & obviously I will receive nothing. What I had was 50% of “something” after the store was paid 100% out of store sales. I am completely busted, have no job, broken car, no home (staying with family), need to see doctors—just in bad shape all the way around. I really just wish I could have worked another job, so I could pay some bills & take care of some things the past couple of years, but I had to be at the store all the time.

I have offered to pay ½, obviously over a long period of time, is this fair? What went wrong here other than store not generating enough sales?

You shouldn’t pay half of anything. You weren’t an equity investor. They took the money risk, you took the risk of losing 3 years of your life.

So, your 3 years is worth WAY more than their 50k.

I’d talk to an accountant for an hour or so. You shouldn’t owe much if any taxes at that level. Their is no penalty for late returns if you owe nothing.

Nomorepizza…Is your business a corporation and are you a shareholder?..Is your name on any leases, contracts with vendors?..Do you have assets elsewhere that can be attached?..Have you talked with a lawyer?..Sorry there are just too many unknowns to provide much of an answer…

PS…To all those folks that are reading this…If a partnership is in your future, please take the time in advance to put together a detailed agreement outlining all your responsibilities…Then you will not find yourself in a mess like this if things go “south”…

Seems to me that you were underpaid by $500 per week so the store now owes you around $75,000. I would now look at the stores debts as $125,000(the 50K owed on credit cards and the 75K owed to you). When the store is sold, you should be given at least 60% of the sales price with the remaining standing as a debt still owed. If it wasn’t in your original partnership agreement for you to be the one taking the major finacial risk why would you not expect to be paid?

Why would anyone partner up with two people who have no clue what they are doing and have no money? Why didn’t you just borrow the money yourself?

Did you have a written partnership agreement? Is the business incorporated? If your name is NOT on any corp docs, leases, business registration etc, you were not a partner or an owner no matter what was said. Your EMPLOYER owes you the wages. You were not paid minimum wage or overtime. Those wages have a prior claim on the proceeds of the sale to any debt. Were they were making debt payments back to themselves before paying you a wage? Contact an attorney.

On the other hand if you are the one on the lease, signing the tax returns etc you were a partner, and one who signed up for a pretty one-sided deal. The landlord and the lenders will be coming after you too. Contact an attorney.

Either way, contact an attorney to be sure you understand what your situation actually IS rather than what you THINK it is.

Are any of the “partners” family related?

I appreciate everyone’s replies. To answer some questions…

No, I was not on any of the paperwork (lease, notes, incorporation) nothing.

Yes, family members are involved.

No, I am not attempting to collect back wages.

I plan on paying off half no matter what my “legal” obligations may be.

Opening on my own was not possible financially & am aware that partners were taking a risk.

Most of the debt came from having to put operating costs on credit cards because there was not enough sales to pay them & pay off the opening debt.

I guess I’m just trying to figure out what is fair & what to avoid in the future. Arguing that my time was not compensated for and should offset my part of the debt will fall on deaf ears.

Lets say the next time I speak with my partners we decide to sell & calculate the debt after sale as 52,000, then I am going to owe 26,000. And if I were to say “wait, I have $2,000 in receipts I haven’t been compensated for”–they are just going to throw them in the trash. It’s not like the debt is now $54,000. That’s not how they see it as far as i know.

I am in almost the same exact boat as you, except we’re still trying to float. (actually I read your posts over again and its pretty uncanny how closely your story hit home). If we were to close up right now, I wouldn’t in a million years pay anything back to my “partner”. Why do you feel obligated to pay them back? Is it cause you’re such a nice guy?


I plan on paying off half no matter what my “legal” obligations may be.

just wonderin what the point of your question then…not sound like a wisea$s, but you ask if it is fair and I think everybody thinks you are CRAZY to pay it if you are not on the hook.

just go your separate ways…they lost some $$, you lost 3 years of your life…PRICELESS

Better luck in the future!

You must like getting abused by people. You probably need a therapist as much as a lawyer or accountant.

I can appreciate the complexity adding family to the mix creates. A couple of thoughts:

Un-reimbursed receipts: If the deal was that you put in time and the partners put in cash, the receipts should go in.

You stated that the deal was your time and their money for a 50/50 partnership. The risk of loss to each party should apply to the contribution made. You lost your time, the partners loss their money.

If the money was loan, there would not be ownership in the business for the lender. If the money was an investment, it should have been at risk.

have offered to pay ½, obviously over a long period of time, is this fair? What went wrong here other than store not generating enough sales?

Well the fact that it is family makes it really difficult and hopefully they are not the ones you are staying with!

Secondly, you have incurred debts as well as your partner…and all debt needs to be included. If they have issue with it you can negotiate it from there but for now include YOUR debt. You asked if it was fair to pay half, yes it is more than generous but you want to make sure it is 1/2 and not 3/4 that is why you need to include your debt.

I am not sure what went wrong but regardless it is coming to an end. I know debt overload can take the money quick regardless of sales.

Don’t fool yourself into thinking being the nice guy offering to pay 1/2 is going to mend the relationships. Once you partner up with family there is going to be tension and it is going to last for quite some time…so don’t get plowed over thinking it is only your problem…you seem to forget they took a risk…the knew the risk…and the investment didn’t happen…so there will be a loss and for some reason you don’t feel justified to include your losses.

As for you, you need to dust yourself off…look in the mirror and know you did the best you could…take the lessons you have learned and move on. Your part of the debt needs to be the least of your priorities right now. Get a resume together, get yourself together and start thinking of yourself…first. Take care of your needs first from here on out…shelter, utilities, food, transportation. Period.

You are not in a postition to pay any of this debt so to say “I will pay 1/2 the debt” doesn’t lesson the blow to your partner cuz you can’t pay them anyway.

I suggest you go to and listen to some of his archived shows…he will provide you some hope in what may appear hopeless for you financially right now.

Your work ethic goes with you so remember your feelings are all goofed up right now…you are burnt out…emotionally and finacially…you have taken some great blows to your “ego” and you need to emotionally get it together so you have something to offer a new job. Things will be okay they always are…it just takes time.

Hang tough and never forget you had an investment here too and your losses are real losses.