Many budding restaurateurs enter into joint ventures with other parties who can provide the necessary financial resources or business expertise to make the effort a success. Joint ventures are often set up on an informal basis but it is much better to enter into such agreements in a more formal manner. This way everyone involved will have his or her contributions, expectations, roles and risks clearly documented. In this article, restaurant joint venture agreement, we take a look at the mechanism involved and analyse the considerations to make.
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For a free initial discussion on how we can help you with the legal aspects of a joint venture agreement, get in touch with us today. We will review your situation and discuss the options open to you in a clear and approachable manner. Early expert legal assistance can help maximise your chances of success and also avoid the stress of dealing with these issues on your own. Simply call us on 0345 901 0445 or complete our online enquiry form and a member of the team will get back to you.
Set out who is responsible for what
A restaurant joint venture agreement should set out exactly what each member brings to the table. For example, one partner might be responsible for the start-up capital required to secure the facilities and equipment and another for running day-to-day operations once the restaurant opens. Clearly set out who is responsible for each part of the business. You don’t want a situation where two or more partners feel they have the right to pick the restaurant’s menu or replace members of staff.
Establish how profits will be distributed
The manner in which profits are to be distributed and losses assessed needs to be included in the agreement. Equally, the precise nature of each party’s stake in the business should be included. In a limited partnership, for example, someone may contribute capital to the restaurant and share in any profits, but not take any management role and incur no liability for debts beyond that initial investment.
Options for exiting the business.
A joint venture agreement should detail how new members may be admitted, as well as the process for when an existing partner wants to leave. Restaurants may require further funding which means a member with additional financial resources becomes desirable. Be specific as to the mechanism involved if you are considering allowing additional parties to enter the joint venture agreement and also include the mechanism behind a party leaving. Existing partners may have rights to buy those shares. Also, decide how the value of that partnership will be determined, as the initial investments can increase or decrease in value over time.
Ensuring your interest are protected
To ensure your interests in the restaurant are protected, the joint venture agreement should clarify how the remaining partners will fund a buyout if a party wants to leave. Ideally, there will be capital or established credit available to do this. If one or more partners should die or become incapacitated, the situation can become more complicated.
The best option is often for each of the principals to be covered through “key person” insurance, which pays on the death or disability of that individual. Depending on your needs and the insurance you choose, the proceeds can be used to buy out the former principal’s heirs, or to hire one or more persons to take over the former principal’s managerial duties.
How we can help
We have a proven track-record of helping clients set up joint ventures no matter the size. We will guide you through all the necessary legal due diligence in a comprehensive and timely manner. We firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting.
How to Contact our Corporate Solicitors
It is important for you to be well informed about the issues and obstacles you are facing. However, expert legal support is crucial in terms of reducing risk, saving you money and ensuring you achieve a positive outcome.
To speak to our Corporate solicitors today, simply call us on 0345 901 0445, or allow a member of the team to get back to you by filling in our online enquiry form. We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.
Disclaimer: This article provides general information only and does not constitute legal advice on any individual circumstances.
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