Reassessing a 50/50 partnership, help appreciated


2

I decided to I wanted to franchise a retail business and a colleague said they wanted to see the business plan. They loved it and believed in the work I had put in a decided they wanted to go into business with me. This was not part of my original plan but this person brought more "pro's" than "con's" to the table so I went for it (strong financial background, successful business person). It was a new business so the security of having a solid partner seemed like a good idea at the time. From the beginning it was always going to be me running the business, and me just reporting to the partner on sales, big decisions, etc. This person's wife now thinks that since she is married to him that she is part owner too, which I can't really argue that, but now that I have been running the business for months now she is trying to get more involved and is creating more headache than value. I was advised by my partner to "keep her happy". If keeping her happy creates redundant work and extra stress that was not ever a part of our original plans, am I right to want to renegotiate the equity split? So that if I am taking on extra work to keep her happy I atleast feel compensated for it. Things to consider: it was a 50/50 capital contribution and I run the company. My partner does provide the bookkeeper since he has other businesses and she could take on another book no problem. Should I go for 60/40 due to my own sweat equity (my idea, the franchisor prefers me to run the business, I handle daily operations) or is there something else I should be looking to? I have already offered to buy my partner out and it is not going to happen. I don't want to threaten them to buy me out because it is a business I created and a passion of mine that I would hate to walk away from and I don't trust this person's wife to be able to run the business effectively.

Equity Partnerships Small Business

asked Mar 15 '13 at 21:51
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Kimberley
11 points
  • I think there must be a law somewhere that disallows any Jane or John Doe to walk into somebody's business and start working without being hired... – Leonardo Herrera 7 years ago
  • They aren't "working", but asking to be reported to for things that have to do with my daily operations, having my employees report things directly to them, messaging myself and my manager at all times of the day, this perosn doesn't do anything with the information, they just "because I want to know". So it creates redundant work and unnecessary stress on myself and my employees because they know they are only supposed to report to me. Trust me, this person has never "worked" on this business. – Kimberley 7 years ago
  • That's why I mention it. A workplace is a private place. A person outside the company shouldn't have powers to interfere with your operations. I know you are in a difficult position, but you are the one allowing it. – Leonardo Herrera 7 years ago

2 Answers


1

I think you need to talk to your partner, probably not even about equity but about the situation.

Fact is, you went in business with your partner not his wife. You wanted him for his expertise, connections and value. You do not have interest in being in business with his wife and are not interested in hiring her or having her as an employee or an active role in the business.

You like her just fine as a person but aren't interested in having her involved in the business. You wanted 1 partner not 2. If he has been stepping away / out of the business and she has been taking a more active role that would also not be ok with me.

I've been in business with my partner for 5+ years and we have a great relationship. His wife is amazing too, but if she was emailing me or calling regularly to get copies of documents, financial reports or wanting me to check in with her I would lose it.

I wouldn't try switching around any equity yet though, just have a one on one with your partner and lay it out there. You don't want a baby sitter or have to do any baby sitting.

answered Mar 17 '13 at 09:15
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Ryan Doom
5,472 points

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I sympathize with you. This is not an easy spot to be in, and I'm afraid there are no "right" answers.

You may want to try to reason with her - tell her that her interfering with the business (you can use words as "trying to help") is making you and your workers unhappy, because there is a lot of communication impedance. Instead, propose to invite her to regular meetings with your partner, so she can have an active role.

Do not try to rule her out by force, thought. If she wants to run the business, have your partner name her as his representative, and then he has to step out. But you must make sure that this is a partnership of two.

How large is your company? If it is relatively large, you can involve lawyers. It's pretty common.

answered Mar 15 '13 at 23:06
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Leonardo Herrera
216 points
  • So at this point she has really drawn the line and has insulted me and my family and says "they" do not want to do further business with me since I am not giving in to every demand she has. So moving forward, as far as expanding the business I am free to do so. But how should I approach the current business we have together if he does not want out and I of course cannot walk away from it. Is there anything on my siade that would help secure the business myself? – Kimberley 7 years ago
  • Just do your work. Politely ignore her requests. Don't let the personal attacks numb your judgement. I don't have more to add, really, because there is insufficient data. – Leonardo Herrera 7 years ago

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Equity Partnerships Small Business