How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Tina Your Own Question

Tina
Tina, Lawyer
Category: Legal
Satisfied Customers: 31669
Experience:  JD, BBA Over 25 years legal and business experience.
Type Your Legal Question Here...
Tina is online now
A new question is answered every 9 seconds

I started a dance studio and dance wear store (brick and mortar)

Customer Question

I started a dance studio and dance wear store (brick and mortar) (LLC) with my in-laws six years ago. They put in about $330,000 cash, plus co-signed on a $142,000 business loan, which was secured by their property. I put in all my expertise, no money. The partnership was split 80 (me) 20 (them), and the goal was to eventually pay off all the capital they had invested and for me to take over the business 100%.

Then, the economy plummeted, and we have struggled for 6 years, barely scraping by. I had been taking $2,000 a month as pay, and claimed it as a loan from the business.

The bank loan has been brought down to $122,000, and we just renewed it. 5 years after we opened the brick and mortar dance wear store, we opened an online dance wear store (both my mother-in-law and I worked on developing this).

Since the online store was doing better and needed more attention, and we were having trouble getting along (ex: in who has the final say, etc.), we decided to split the two. I own 20% and my mother-in-law owns 80%. (My mother-in law took over the online store and I, the dance studio). My husband and I separated, and I was running the dance studio as a single mother. The sales dropped, and we lost our lease with the landlord. Currently, we have a buyer for the dance studio who would like top purchase it for $40,000.

Now, my in-laws say that when I sell the dance studio and brick and mortar store, they will be opening a new dance wear store a few miles away. They want me to sign on paper that I will owe nothing of this new store, in exchange for me not having to pay them all the money that I "borrowed" from them. In return, they will be taking all the inventory(valued at around $80,000) plus the fixtures, client list, software, computers etc.

I feel torn between being ok with this and being upset that I have worked for the past 6 years on a business, and am left with nothing. At the same time, I feel very guilty that they lost all this money they put into the business, though the online store is doing awesome, and if managed right, can and will pay off all their investments within 5 years or so, plus they will be bringing in substantial amounts of money (Based on the past year's growth rate).

My Question is, should I just let them have the business, or should I fight to keep my 20%? They have said that even if I own nothing in this "New" business, I am still morally obligated to pay them back what they invested. Is this correct? Or should I feel fine with having them take the business?



Thanks
Submitted: 1 year ago.
Category: Legal
Expert:  Tina replied 1 year ago.

Hello and welcome.

My name is XXXXX XXXXX my goal is to provide you with excellent service today. I am sorry to hear of your difficult situation. Before I can give you an accurate answer to your question, please provide the following additional information:

With regard to this new dance wear store that your in-laws intend to open, would they be breaching some agreement with you by opening the store? On what basis would you assert an ownership interest in that new business (20%)?

I look forward to assisting you as soon as I have received this information. Thank you.

Customer: replied 1 year ago.

Hello,


 


The current store we have now is called La Pointe (LP) and the new one


The dance wear Shoppe (TDWS).


 


They expect me to close LP (Even though that part of the business is profitable) so that they can keep the accounts with the vendors. If I move the store and keep it running, they will not be able to have the accounts, since the vendors only open a few in each area, and have to be at least 20+ miles away from each other. I could, if I wanted, move LP to another facility and keep it going, but that would mess them up.


 


I do have 20% ownership in the online dancewear store. It is in our signed agreements, so they would be in breech, unless they close the online store and re-open under a new entity. (Which I think they want to do)

Expert:  Tina replied 1 year ago.
I see. Thank you for providing this additional information, Evelyn. It leads me to another question if you don't mind. IF you were to assert your interest in the online store, would your interest be enough to pay down the loans you owe to your in-laws, together with the income generated by the dance studio?
Customer: replied 1 year ago.

That depends what we value the online store as, but currently, I would think no.

Expert:  Tina replied 1 year ago.

OK, that is what I had originally believed based on the information you provided. Given that, the in-laws could cause you a great deal of legal trouble, cause you to incur substantial expense and potentially ruin your credit rating since it does appear you are in breach of the contract.

Because of the potential for this, it would typically be best to agree to be released from the balance of the loans they made to you in return for the demands they have made.

I certainly understand the emotional and psychological impact such a decision must have on you, but it does sound like a reasonable offer, which you would probably be wise to accept.

If they intended to do so, they could keep your business interests tied up in litigation for a prolonged period of time, causing a great deal of stress and additional cost, so I would typically cut my losses at this point and move forward with something more positive.

It would be best for you to have any documents they present to you reviewed by a local attorney to ensure they cannot later claim you are obligated on the loans for some reason or otherwise interfere with your future business ventures.

I hope this helps clarify the situation for you. I wish you all the best in the future! Please remember to rate my service once you have all the information you need. If you have any other questions, please ask me – I’ll be happy to respond. Thank you!

Tina

Customer: replied 1 year ago.

Do you think I am morally obligated to still pay them their investment back if I do give them 100% ownership?

Expert:  Tina replied 1 year ago.
Hello again, Evelyn.

No, not if you give them 100% ownership in the business. I would make sure the settlement is in writing though, so they cannot later pursue a legal action against you for any balance owed.
Tina, Lawyer
Category: Legal
Satisfied Customers: 31669
Experience: JD, BBA Over 25 years legal and business experience.
Tina and 6 other Legal Specialists are ready to help you
Expert:  Tina replied 1 year ago.

Thank you for your positive rating of my service. I hope you are able to resolve this matter with your in-laws very soon. It has been my pleasure to assist you and I hope you will ask for me should a future legal need arise.

When you receive your Customer Satisfaction Survey from JustAnswer, please do rate me highly (9-10). It benefits my ability to assist you and other customers, and would be tremendously appreciated.

Thanks again and all the best to you.

Tina

Note: Please feel free to request me if you have future legal questions by going to your “My Questions” page and clicking on “Request Tina again” next to my photo. I look forward to hearing from you.

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • Mr. Kaplun clearly had an exceptional understanding of the issue and was able to explain it concisely. I would recommend JustAnswer to anyone. Great service that lives up to its promises! Gary B. Edmond, OK
< Last | Next >
  • Mr. Kaplun clearly had an exceptional understanding of the issue and was able to explain it concisely. I would recommend JustAnswer to anyone. Great service that lives up to its promises! Gary B. Edmond, OK
  • My Expert was fast and seemed to have the answer to my taser question at the tips of her fingers. Communication was excellent. I left feeling confident in her answer. Eric Redwood City, CA
  • I am very pleased with JustAnswer as a place to go for divorce or criminal law knowledge and insight. Michael Wichita, KS
  • PaulMJD helped me with questions I had regarding an urgent legal matter. His answers were excellent. Three H. Houston, TX
  • Anne was extremely helpful. Her information put me in the right direction for action that kept me legal, possible saving me a ton of money in the future. Thank you again, Anne!! Elaine Atlanta, GA
  • It worked great. I had the facts and I presented them to my ex-landlord and she folded and returned my deposit. The 50 bucks I spent with you solved my problem. Tony Apopka, FL
  • Not only did he answer my Michigan divorce question but was also able to help me out with it, too. I have since won my legal case on this matter and thank you so much for it. Lee Michigan
 
 
 

Meet The Experts:

 
 
 
  • Tina

    Lawyer

    Satisfied Customers:

    8436
    JD, BBA Over 25 years legal and business experience.
< Last | Next >
  • http://ww2.justanswer.com/uploads/MU/multistatelaw/2011-11-27_173951_Tinaglamourshotworkglow102011.64x64.jpg Tina's Avatar

    Tina

    Lawyer

    Satisfied Customers:

    8436
    JD, BBA Over 25 years legal and business experience.
  • http://ww2.justanswer.com/uploads/RA/ratioscripta/2012-6-13_2955_foto3.64x64.jpg Ely's Avatar

    Ely

    Counselor at Law

    Satisfied Customers:

    19941
    Private practice with focus on family, criminal, PI, consumer protection, and business consultation.
  • http://ww2.justanswer.com/uploads/FL/FLAandNYLawyer/2012-1-27_14349_3Fotolia25855429M.64x64.jpg FiveStarLaw's Avatar

    FiveStarLaw

    Attorney

    Satisfied Customers:

    8189
    25 years of experience helping people like you.
  • http://ww2.justanswer.com/uploads/jespoag/2008-12-17_222355_jessepic.jpg JPEsq's Avatar

    JPEsq

    Attorney

    Satisfied Customers:

    2132
    Experience as general attorney, in house counsel, SSDI, Family Law attorney, and law professor
  • http://ww2.justanswer.com/uploads/gsenmartin/2008-04-22_214950_me1.jpg Guillermo J. Senmartin, Esq.'s Avatar

    Guillermo J. Senmartin, Esq.

    Attorney

    Satisfied Customers:

    110
    7+ years of experience handling various legal matters.
  • http://ww2.justanswer.com/uploads/PA/PaulmoJD/2013-10-10_195858_JAImage.64x64.jpg Law Educator, Esq.'s Avatar

    Law Educator, Esq.

    Attorney

    Satisfied Customers:

    31621
    JA Mentor -Attorney Labor/employment, corporate, sports law, admiralty/maritime and civil rights law
  • http://ww2.justanswer.com/uploads/dkaplun/2009-05-17_173121_headshot_1_2.jpg Dimitry K., Esq.'s Avatar

    Dimitry K., Esq.

    Attorney

    Satisfied Customers:

    15975
    Multiple jurisdictions, specialize in business/contract disputes, estate creation and administration.