In the past, I have worked on many different projects with groups of people ranging in size from 2 to 10. These projects have always flopped due to numerous issues, but one issue that has always been the death of a project has been the friendships that get in the way of business.
Being an individual who is interesting in maintaining peace, but also wanting to ensure the projects will succeed, I find myself in a difficult situation.
Other partners on these projects have said to just cut the offending party loose, but to do so without any consideration of how it's done is dangerous to any friendships.
Now, here are a couple different methods that have been suggested:
My concern with removing them forcefully is that any work they have provided may put the project at risk of lawsuits or other dastardly deeds later on (especially if the project is successful). But by letting them drift away from the picture, it takes a much longer length of time for this to be complete, and causes undue stress on the remaining members.
I've just never had any luck with this sort of thing and wanted to get some advice.
Worth noting is that these projects never make it to the point of being an official documented company.
This kind of question always makes me think of the t-shirt slogan WWJD (you know, What would Jesus do?) The answer is usually: "He wouldn't be in this mess in the first place!" Your projects always flop? Perhaps it is time to take a different approach. Start with an agreement. If you don't know how to do that, I would recommend that you read The Book of Agreement. It lays out how to get everyone to make their commitments up front in such a way that, if they fail to deliver, they are happy to be out. You apparently keep putting yourself in a no-win situation. Take note how that isn't working for you. Next time, you can avoid this problem.
For this situation, it seems from your question that it is more important to you to maintain friendships than have this project succeed. That is an entirely acceptable position. Accept the cost (the loss of the project) and relish in the gain (your continued friendship).