Partnership Agreements

Entering into a business partnership is similar to entering into a marriage.  While no two partnerships are identical, there are several standard considerations that can be addressed prior to forming your company. Once all issues are discussed and resolved by the partners, than operating agreement (or in the case of a Corporation, a shareholder agreement) must be prepared. Each partner should consult with an attorney to ensure that the written agreement is clear and unambiguous.  

Some considerations include:

• Do you and your partner(s) share similar ideas, goals and objectives?
• Do you and your partner(s) share a similar creative vision for the business?
• How does your partner(s) handle disagreements?
• How has your partner(s) handled prior business and personal relationships?
• How ambitious and dedicated is your partner(s)?
• Is one partner more committed than the other(s) to the development of your business concept?
• How many partners will there be?
• Whose responsibility will it be to assign and ensure that all tasks are completed?
• Who makes the final decisions and on what issues?
• Will there be a hierarchy in the partnership?
• What will each partner commit to the partnership (i.e. time, month or both)?
• Will the partnership be an equal percentage partnership?
• Can a partner's interest be diluted by future capital calls?
• How will profits be calculated?
• How will profits be divided?
• How often will profits be issued?
• Will the partners receive salaries and if so, are they paid during the build out of the restaurant?
• Will you include a provision that terminates or abates the partners’ salaries if profits dip?
• When disagreements arise, how will they be handled?
• Who will entertain and address to employee' complaints?
• Who will have the ultimate decision making authority on employee' complaints?
• Will each partner be required to ‘buy into’ the partnership?
• What will the ongoing financial responsibilities of the partners be to the partnership?
• Will bonuses be issued and if so, how often and by what measure?
• What expenses will the business cover for the partners?
• Will the partners have titles and if so, how will the titles be assigned?
• Will all partners have access to all partnership' documents including financial statements and records?
• What is expected of each partner with respect to the advertising and marketing of the business?
• What are the hours each partner is expected to work?  Do all partners possess the same work ethic?
• Will happens in the event of a bankruptcy, death or divorce of one of the partners?  
• What happens if a partner becomes disabled and is no longer able to contribute to the partnership?
• Will rewards and control fluctuate with the contribution of the respective partners? 
• Are partners permitted to sell their interest in the business?
• Are partners permitted to withdraw from the business?
• If a partner dies, does his/her family inherit their share in the business, or do the other partners?

If you are considering establishing a partnership in a restaurant business, and are in need of legal advise, please call DiPasquale & Summers for a free consultation at (646) 343-4607.