foxy80
10-17-2012, 05:25 AM
A few months ago I came up with the idea to open a business in my area. I did the research, found a good franchise, and then told my family about it. My brother wound up taking an interest in it. I was hesitant at first, but reality set in and I need his half to afford starting the franchise.
I was recently accepted into medical school, and if I accept, I will be starting next august. Or store is projected to open late November or early December. In those 9-10 months, I would primarily run the entire store without my brother's assistance. After I left we would likely hire a manager to take over.
My brother is proposing that we split the business 50/50 up until I leave. At that point, he wants to do a 90/10 split. His reasoning is that for the rest if my life I will be earning 10% on a business expected to take home about 300k/yr for my initial investment of about 80k. He also said I would get 5% of profits from additional stores opened, even if I had no involvement in them, and I could have an option to buy back into the other stores at any time.
I'm not entirely sure I'm ok with the arrangement for a few reason. I'm not sure if this is legitimate for wanting a bigger cut, but I feel like the fact that it was my idea and I did all of the research and inquiring on the franchise prior to his involvement is worth something. In addition to that, the franchise predicts we lose profits for few months and slowly start breaking even and eventually start making decent profits around the later months. So, my 50% ownership falls under a period where the profits aren't there, and I'm essentially building up the store. I'm also unsure of why he should earn 90% of the profits if we're going to have a manager running things. His reasoning is that because he will have to deal with the headaches while I'm removed from the businesses.
Am I being unreasonable in wanting this to be closer to an even partnership, even when I'm gone? I want this to be fair for both of us. I'm thinking an equal splitting of profits would be more fair if we also assigned a dollar amount to hours worked. That way, any hours he puts in will be compensated before the profits are split. I suggested this and he thought it was still unfair as I should not be earning more than 10% if I'm removed from the businesses. I feel like it being my idea, half of my funding, splitting the risk, as well as solely building up the store in the beginning while he maintains his other job should entitle me to equal or near-equl partnership.
Do you folks have any opinions on this, or suggestions for ways we can do this? Any suggestions for how we should deal with future stores? For the record, it's likely I'll be undertaking medicine and won't be working in these stores, only providing capital for the additional stores to be built.
Thanks guys and gals
I was recently accepted into medical school, and if I accept, I will be starting next august. Or store is projected to open late November or early December. In those 9-10 months, I would primarily run the entire store without my brother's assistance. After I left we would likely hire a manager to take over.
My brother is proposing that we split the business 50/50 up until I leave. At that point, he wants to do a 90/10 split. His reasoning is that for the rest if my life I will be earning 10% on a business expected to take home about 300k/yr for my initial investment of about 80k. He also said I would get 5% of profits from additional stores opened, even if I had no involvement in them, and I could have an option to buy back into the other stores at any time.
I'm not entirely sure I'm ok with the arrangement for a few reason. I'm not sure if this is legitimate for wanting a bigger cut, but I feel like the fact that it was my idea and I did all of the research and inquiring on the franchise prior to his involvement is worth something. In addition to that, the franchise predicts we lose profits for few months and slowly start breaking even and eventually start making decent profits around the later months. So, my 50% ownership falls under a period where the profits aren't there, and I'm essentially building up the store. I'm also unsure of why he should earn 90% of the profits if we're going to have a manager running things. His reasoning is that because he will have to deal with the headaches while I'm removed from the businesses.
Am I being unreasonable in wanting this to be closer to an even partnership, even when I'm gone? I want this to be fair for both of us. I'm thinking an equal splitting of profits would be more fair if we also assigned a dollar amount to hours worked. That way, any hours he puts in will be compensated before the profits are split. I suggested this and he thought it was still unfair as I should not be earning more than 10% if I'm removed from the businesses. I feel like it being my idea, half of my funding, splitting the risk, as well as solely building up the store in the beginning while he maintains his other job should entitle me to equal or near-equl partnership.
Do you folks have any opinions on this, or suggestions for ways we can do this? Any suggestions for how we should deal with future stores? For the record, it's likely I'll be undertaking medicine and won't be working in these stores, only providing capital for the additional stores to be built.
Thanks guys and gals