i am opening up a bakery/ catering business with a partner. His dad has agreed to make the facility that the business will operate in. We both agreed the first thing we need is an oven, which runs around 17k and we could split it. His dad is just building the shell of the building, no equipment or anything else.
Today i asked what the plan was buying more equipment as the company grew. My partner just mentioned that the business would be split 50% him, 30% his dad and 20% for me. I didn't want to say it yet but I didn't understand why his dad would get such a large percentage just for building the facility. He would have no part in the baking or cooking.
What should I do here? I feel this is not fair and don't know what to do, considering I would be working countless hours. Another thing is that the facility isn't big, if business goes well we'd potentially have to upgrade within a few years.
Need business advice
Be an alpha male and ask for 45%. He will say no and that's when you have to negotiate. Explain why it's unfair and be prepared to just say no if necessary.
i've obv never done this before, if i do go with 20% and we make a killing am i just screwing myself? Would it be smart to just take it and slack? issue with that is that im already really involved and i dont fully trust my partners judgement on somethings lol not that there is a trust issue.
I strongly suggest you tell your "friend" and his dad to fuck off and that you bail on this decision
You're already being shit on and you haven't even started doing business yet.
Not only are you going to be paying 50% for the equipment, you're the one that is going to be putting in all the sweat equity.
You're already outnumbered two to one and this shows that they have no problem making decisions without you.
Of course you don't have anything in writing about the boundaries, expectations, and responsibilities, do you?
Never, ever, fucking ever, do a partnership agreement. Done it twice in the past, once with a friend and once with my brother. Both of my experiences and every other person I've heard from says the same story. One partner gets lazy and entitled and shits up the business as one partner carries it all.
I'd rather wagesalve than in a partnership again.
Tell your friend that you're out of the partnership and you will just be an employee for X amount per hour with benefits and he and his dad can pay for the oven and building.
so youre saying ask for a hourly wage id be happy with before investing any money into the business. I want to have a say and everything like that, i want to be the owner not someone who just works there and has no say
How did it turn out for both of your business?
we sell bread and cater atm, there is a big demand and we need to upgrade everything so we decided we would work together. Then all of a sudden his dad is getting a say in this but has no clue about anything. Would an option be just purchasing a former restaurant or bakery as space and cut the dad out completely? Im stressing about this because it can be a huge success if handled correctly.
is there a possibility to get a bigger % later on, as in if we move to a bigger location where the dads investment would become irrelevant.
What exactly did you mean by building a facility and shell of a building? Is it a new building? Is he paying for architect fee, is he going to deal with the city council regarding building codes then yeah he'd probably deserve a share since thats a lot of work/money but why your friend getting 50% and you 20% ?
idk none of that made any sense to me. equal work would be done, not like he created the idea of an ipod or something like that.
head for the door, that's bullshit.
I used to run a successful catering company out of a rented kitchen. We paid $50/day to use a huge commercial kitchen with all equipment, pots, pans, everything. We'd only book it when we had work scheduled.
your 'partners' are getting greedy and overestimating their worth. Dump them and seek other options.
With only 20% you don't have a say anyway.
>is there a possibility to get a bigger % later on, as in if we move to a bigger location where the dads investment would become irrelevant
No, and don't let them convince you otherwise. You have no controlling stake in the company and they will never change that because why would your friend give up his money and control or his dad give up his free money?
And even if one of them does eventually want out, you'd have to buy their chunk if you wanted more, so you'd be paying more money for what you should be getting already.
true and true. i will bring up the option of renting a space, it would be the same thing but his dad wont have a say in anything
also true, great advice
I ended up walking away from one by basically accepting a fraction of my total equity and the other one I had to buy him out for more than his equity was worth.
Being in a bad partnership is functionally the equivalent of having your dead Siamese twin attached to your body.
It is inevitable that one person shits the bed.
I had a friend who started a restaurant with one of his friends. The guy ended up getting divorced and his ex wife got control of his half of the business and she proceeded to fuck it up horribly and ran it out of business.
I was told by another business owner that a partnership agreement contract should literally cost you a thousand dollars in legal fees to draft up. You and the partner need to go meet with the lawyer multiple times to negotiate it and discuss a million different scenarios about what happens to the business in each scenario.
It has to cover every fucking thing, from what happens if one person wants to leave, if one person neglects their responsibilities, if one person gets divorced, if one person dies, if one person wants to bring in more partners, etc, etc, etc.
No one does this though, including me, so the person who actually cares about the business will always get fucked.
If he's adamant about his dad having a share, suggest 40 for him, 40 for you, 20 for dad. Why should you be giving up your share of the company for his dad and he give up nothing?
this is a troll thread gonna brb and an hero for replying
>Tell your friend that you're out of the partnership and you will just be an employee for X amount per hour with benefits and he and his dad can pay for the oven and building.
>dad "builds inside of building"
>"hey son let me own some of the business itll be a senpai thing and this could work out"
>sure dad how much u want
>eh just a 1/3 we can all work together!
>haha ya dad lets do it! while we are at it we should just take ur 1/3 from user kuns portion sure he wouldnt mind going to 2/5s
if daddy wants to join his son should be paying the majority. Quit being a cuck
Strong demand of you 50% him 20% and his dad30% his dad probably gonna help him pay for machinery anyways desu
Dont go lower than 40% for you 30% for "biz partner" and 30% for bizpartner dad.
but desu you want majority owner ship because they are a duo cuz father/son and will in most bad situations be against u.
this is a troll thread gonna brb and an hero for replying
>Tell your friend that you're out of the partnership and you will just be an employee for X amount per hour with benefits and he and his dad can pay for the oven and building.
this is the best option i think but if u want ownership pay attention to rest of post
accurate
All of this seems like hes winging it, he does not consult me about anything now that i think about it. I have put equal parts effort into the business so far and im not willing to get it taken away just because its his idea for his dad to build something when there are 30 alternatives.
it has me thinking another option could be just paying the dad rent, i see no point in him getting any share in the business he has no part in
Disregard what I said here You want majority like mentioned, because of course they will stick together, so even 40-40-20 is really 40-60 and you're still fucked power-wise, but at least get more money out of it.
i think i do need to mention that 20 30 50 is actually 80 - 20 which is shit. I need to figure this out soon because mid February well be going to ottawa to scope out an oven to purchase.
Yeah, the whole deal shits on you at this point. Either cut the dad out and go 50-50 with your friend or just walk away and do it on your own.
If your friend is anything like the people I know who make these shit deals sound reasonable, you're going to be doing it all on your own regardless of the agreement. All the split will show is how much of your work someone else gets the credit and money for.
true I've decided im either going 50/50, 50 for myself and them two can split or im walking. I don't want to sell out. This is a good opportunity as long as they don't fuck everything.
Youre about to start a race with deadweight, ditch em and do it solo or get a new n reliable person
Before delving into the specifics of your case, let me just say:
> brick and mortar
no
> food service business
no
> partnerships of any kind
no
EVEN IF everything were to go perfectly, there is just so many better ways to make money. Look at this board. Guys coding, guys doing sales, guys doing real estate, guys doing trades. You're looking at working your ass off making food and hoping to hit $40k a year. It's just not a good choice.
Catering can be good, but you need to be 100% about the catering, no dine in. Which would mean just having some a food truck and maybe a secondary supply truck. Not 100% sure if you would need the commercial space.
Have you worked in food/catering?
Don't listen to the haters, user!
Follow your dreams, going into business with your friend and his dad will be such an amazing experience!
Just say YES and the world of entrepreneurship is open to you!
You're going to learn so much, I'm really happy for you. Just fucking do it.
The other thing to consider is what do you actually bring to the table?
do you know how to run a business?
do you have wads of cash to spend?
do you know how to find clients and make sales?
do you know how to shop vendors?
are you a chef?
do you have excellent credit or a rich uncle?
It's entirely possible that you're actually worthless and they're being super generous with you. It's hard to say. You don't seem terribly bright.
>Not 100% sure if you would need the commercial space.
required by law in most of the US and probably lots of other places.
food trucks have to have commercial kitchens as well in most states.
Stop shitting on this user! Let's encourage him to reap the riches he will earn through a partnership!
I think he's ready, don't you?
you're right, he's ripe to learn.
and he doesn't seem to be absorbing the lessons anons are trying to teach him. Maybe the hard way is best.
i have great credit am a chef and have money to blow. I've done catering where people pay up the ass for it. My plan is to work with food until i can just start buying income properties. I obv dont want to do it my whole life its too much stress
>i have great credit am a chef and have money to blow
then what does your 'partner' bring to the table?
if what you say is true it doesn't sound like you need a partner at all. Except maybe to tell you what to do since assertiveness doesn't seem to be your strong suit.
You know you're ready. It's time to tell us, user:
Are you going to do it? Are you going to Ottawa to seal the deal?
You already know the right answer. Tell us you're going to make the wealthy choice!
he brings about the same as me. I have to suggest better ideas on most things. we've done work together for a while now just the demand is growing. its all good other than this crap with his dad.
then he's stealing from you. He has no right to give away your equity in the partnership. If he wants to cut his dad in it has to be out of his share, not yours.
and you're dumb enough not to have a contract.
and even if this gets settled it'll just happen again because you're still dumb and your partner is still a thief.
texas sized 10-4 on that. A contract will be made obv its not going to be a handshake
>and even if this gets settled it'll just happen again because you're still dumb and your partner is still a thief.
>Tell your friend that you're out of the partnership and you will just be an employee for X amount per hour with benefits and he and his dad can pay for the oven and building.
seems legit to me, maybe you need more time to get more biz smart neways