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Richard
Richard, Attorney
Category: Business Law
Satisfied Customers: 55325
Experience:  32 years of experience practicing law and a businessman.
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I will open new restaurant with my partner total 4 person included

Customer Question

I will open new restaurant with my partner total 4 person included me but my name and my husband name not on the lease so that will be high risk for us or not, but we will open corperate run business have specific partner ship 25% of each person to manager that restaurant please explain to me
Submitted: 6 years ago.
Category: Business Law
Expert:  Richard replied 6 years ago.

Good evening. Actually, not being on the lease is good, because if the business has difficulty, you will not be personally liable. But, you should have an ownership document between all the owners so you know what your agreement is. Without an ownership agreement....what kind depends upon the type of entity...though it needs to be a limited liability entity....you are looking at trouble in the future...you need to have a meeting of the minds now.

 

 

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Customer: replied 6 years ago.
so it have any chance for the one who have name on lease can kick me out when they want to , or even they want to sale and i am do not want too can i do that
Expert:  Richard replied 6 years ago.
The lease doesn't determine ownership. But all the owners have to have some kind of entity....it's insane to have a restaurant as a verbal general partnership with no limited liability. Whatever type entity...LLC, S Corp, limited partnership...you need to get this formed and organized or I would recommend you not participate.
Customer: replied 6 years ago.
so sorry i am not american so it hard for me to understand , so are you recomendme and my husband to do this or not because we dont want to take a risk. now we have s corp for 4 person already 25% each person but i am worry about lease
Expert:  Richard replied 6 years ago.
Having been doing what I do for 31 years now..I would recommend you do not participate in this...it's not well conceived.
Customer: replied 6 years ago.
thank you, if you dont mind please explain about detail of risk we will have please
Expert:  Richard replied 6 years ago.
You're welcome...First...95% of new restaurants fail; Second...if you don't have organizational documents up front that deals with how much everyone contributes initially, how much everyone owns, what happens if the restaurant needs more money, how are decisions made--operating and major, what about the sale of ownership interests, etc. etc. There doesn't seem to have been any documents prepared setting forth the details. You never want to enter into a deal when you don't even know what the deal is.
Customer: replied 6 years ago.
one for question please
in case we put money already and corperation already done and partnership agreement already happen and have paper work , if in the future my part (me and my husband 25+25 = 50%) break up with that partner who have 50% and their name on the lease , my question is can they kick us out of the corperation or not or may be let another corperation take over , how about our share ?
Expert:  Richard replied 6 years ago.
No...they cannot kick you out simply because their name is on the lease.
Customer: replied 6 years ago.
yes i mean form corperation because only their name on lease not our name but in corperation it 4 of us name, for me it seem like who sign lease have more power even we have 25% same
Expert:  Richard replied 6 years ago.
I'm going to opt out and let someone else help you from here. I really, to be fair, think you should have a better understanding of your deal before you move forward. Take care.

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