Family members and friends usually venture into a new restaurant business since the burden of starting and maintaining this type of business can be shared, and having more heads than one can result in better business making decisions, and making creative strategies to boost the business. However, partnerships can also have their challenges too and it usually stems from disagreements and a lack of open communication. However, partners can mitigate those challenges by making an agreement where they state all the provisions and terms of opening and operating a restaurant business. Read the article to know how to write an agreement.
A partnership agreement is a contract made between partners in a partnership business that states all the terms and conditions of the relationship between the business partners, including their percentages of ownership of the company, the distribution of profits and losses for each partner, and a description of management powers and duties of each partner.
The first part of the agreement must give details about the company such as its name, type of corporation, and purpose of the partnership should be included. Don’t forget to include other information such as the nature, location, office hours, and purpose of the business, any special licenses or permits obtained to do the business. Make sure to also specify the duration of the partnership.
The next section of the agreement must discuss the liability of each partner. Discuss the type of partnership and the status of each partner.
Include in the agreement the percentage or amount of equity that each partner owns of the company. Don’t forget to state how much each partner contributed at the time when the company started and each partner’s subsequent contributions.
This section is where you mention the process of decision-making and management within the partnership. State how business decisions are made between each partner to reach an agreement. This section is important to include so that collaboration of partners will be more organized and avoid the likelihood of dispute.
The section is where you provide your efficient method of dissolving the partnership when both of you and your partner decide to go on your separate ways.
Sometimes, even if you try to avoid disputes from escalating, they usually happen, and they’re not pretty. That’s why it’s crucial to include a dispute resolution mechanism that you and your partner can work on when complications arise.
Just as mentioned above, if you decide that you and your partner dissolute the partnership, you both need a plan on what will happen to the business afterward. Decide on what mechanism you will use if whether the remaining partner will buy the leaving partner’s shares, or sell it to an approved third party, or if they will take on a new partner in the first place. State these terms clearly and don’t forget to add details and timelines to properly plan and execute this process.
The four types of partnership are:
A restaurant or any commercial establishments that prepare and serve food belong in the foodservice industry.
Quick service or fast-food restaurants are considered the most profitable restaurant type because most people eat at these places because of low-cost food and its quick preparation of meals.
When writing the agreement, it is best to have regular meetings with your partner and communicate with them regularly about your goals of the restaurant and the partnership and how you will divide the responsibilities in running the business. You two must be on the same page since starting the business to avoid personal conflict and relationship strains that may affect your business negatively. To help you get started writing the agreement, download our free sample templates above to use as your guide!
