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Original poster

DH and his business partner

58 replies

KimmyKimdoo · 07/10/2021 15:31

Advice please if you have any!

DH has run a successful business with his partner for the last ten years. Partner came to ask DH if they can set up a second business (the same) just down the road. He wants them to go 50-50 on everything just the same but work at one site each most of the time. They’re looking at doing this currently, it will be very expensive to set up initially of course. Now partner has a new girlfriend who wants in. She’s just quit her full time job and is in training to work in the business. Partner is trying to make the second business more of “their” thing saying the income should be split 1/3 each and he and the new girlfriend will run it. It doesn’t seem right and I feel the partner is taking advantage of DH and his trusting nature. I’m worried about all sorts of things really and DH is going to get legal advice obviously. Any suggestions on how DH can be fair to partner and new girlfriend about her working? It’s not unreasonable to just say no way is it?!

OP posts:
MultiStorey · 07/10/2021 15:35

This reply has been deleted

Message withdrawn at poster's request.

Nicknacky · 07/10/2021 15:36

What’s the issue with her having a role?

JasonMomoasgirlfriend · 07/10/2021 15:39

I don't see why DH is needed except to be a cash cow.

No no no

Although will they want to sell his share and set up independently if he doesn't go for it? If so, can DH manage the current business on his own?

Original poster
KimmyKimdoo · 07/10/2021 15:40

@Nicknacky we only know her through the partner, she’ll be very newly qualified and inexperienced. They’re expecting us to pay for 50% of the start up costs and her have 1/3 of all profits. We do t want to be in business with her.

OP posts:
Original poster
KimmyKimdoo · 07/10/2021 15:42

@JasonMomoasgirlfriend looks like he will have to have the first business alone either way. The partner is leaving to run the second business. Partner will still be taking 50% profits out of it though.

OP posts:
Rainbowqueeen · 07/10/2021 15:42

Do they use an accountant ? I’d say that you would like to get some professional advice about the best way to set up the née business and arrange it.

JasonMomoasgirlfriend · 07/10/2021 15:43

Can you DH buy him out?

GoodnightGrandma · 07/10/2021 15:44

No way should she be getting 1/3 unless she buys 1/3 of the business.

namechange30455 · 07/10/2021 15:44

[quote KimmyKimdoo]@Nicknacky we only know her through the partner, she’ll be very newly qualified and inexperienced. They’re expecting us to pay for 50% of the start up costs and her have 1/3 of all profits. We do t want to be in business with her.[/quote]
Hang on - if your DP puts in 50 percent initially then he should get 50 percent back! If the business partner wants to split the profits with his girlfriend they can have 25 each. They sound extremely cheeky to me!

MooseBeTimeForSummer · 07/10/2021 15:45

So the partner wants to set up a competing business just down the road?

Annasgirl · 07/10/2021 15:45

Go to your accountant and perhaps solicitor for advice. You need to dissolve the partnership. Is there a non compete clause? Will the new business potentially eat in to the customer base of the existing one?

MrMrsJones · 07/10/2021 15:45

The second business is either split 1/3 each, including start up costs and profits or 50/50 between your husband and his business partner and his business partner splits his half 50/50 with her

Original poster
KimmyKimdoo · 07/10/2021 15:46

@namechange30455 I think it should be 50-50 out of both businesses too for DH and the partner. If his girlfriend wants to work there, he can pay her out of his share. She’d be splitting HIS workload after all - she won’t be coming back to business number one to help DH! She’s offered to put in “some” money towards set up but DH doesn’t want her involved at all.

OP posts:
Flickeringgreenlight · 07/10/2021 15:46

Uhh Op, there will be so much legalities around it. On face value, it of course doesn't seem fair to have the 1/3 split of profits (as your husband paid 50% of set up costs) whilst business partner also takes 50% of profits from business he isn't going to be running anymore. I think the cleanest and safest way will be to pay the girlfriend a wage. Anything more, the business partner should divide his 50% share with her. No way I'd make her an official partner.

Original poster
KimmyKimdoo · 07/10/2021 15:48

I’m being a bit disingenuous by saying it’s down the road… it is a short drive away and shouldn’t eat into the original client base of business 1 (although will very slightly).

OP posts:
Original poster
KimmyKimdoo · 07/10/2021 15:51

@Flickeringgreenlight well this is one of the issues. DH doesn’t want to pay her a wage. The way he sees it, he will be doing 100% of the work in business number 1. Then splitting the profit with his partner. So, for business number two he expects partner to do 100% of the work for that business and split it fairly with him. He wants to pool all the income and split it (because initially the first business will likely be a lot busier anyway and so he’s going to be doino more work on his own!) if the partner wants to employ someone to help him, he can pay them a wage himself out of his profit. DH doesn’t want her wage to come out of their shared profits.

OP posts:
HollowTalk · 07/10/2021 15:52

Is it a hospitality-based business, eg you have a pizza place and he wants to open another down the road?

I think the best thing would be for your husband to decide whether he wants to continue working with that partner (he sounds flakey really with regard to his girlfriend.) If so, then 50:50 is the only way to go, with the woman getting a salary. She can't just decide to put a bit of money in and get 30% of the takings.

If he doesn't want to work with that partner any more, he should look at buying him out. He can still help him with setting up the new business, if he wants to stay friends, but financially they'd be separate.

HollowTalk · 07/10/2021 15:53

I agree with him - the partner should pay his g/f out of his own takings.

Original poster
KimmyKimdoo · 07/10/2021 15:57

@HollowTalk ye imagine a pizza place (it’s not a pizza place but just for ease). Everyone knows the pizza place’s name and loves their special cooking style and their recipes. Opening another the same but down the road will build on all their hard work. DH and partner created those things, it’s their brand. They want their own places which is fine and business is doing really well BUT I don’t want him taken for a ride. If they buy a new place and use all the shared branding, same website, split costs with ordering things and so on… they can’t take 2/3 of profit out of the second business. That’s just not fair sorry.

OP posts:
RestingPandaFace · 07/10/2021 15:57

I guess there are 3 obvious options, but it would depend on finances etc.

1 Completely separate their roles as employees and directors. Each person that works should get a salary based on experience and any (smaller) profit is split amongst shareholders in proportion to their shares.

  1. Other option would be to say no to business 2 and use the money that would be invested in the start up to buy partner out of business 1.
  1. Treat second business as an expansion of the first, run one site each and employ a junior person at each site to take on some of the workload (one being the girlfriend)
RestingPandaFace · 07/10/2021 16:00

Should have said in option 3 pay the juniors a salary and split the profits across the group.

HollowTalk · 07/10/2021 16:00

Why does the partner want a site that will infringe on the other site's custom? Did he make that decision on his own?

I agree with point 3) above - run one site each and employ a junior on each site. Presumably your husband would struggle to do all the work on his own if the partner wasn't there?

HollowTalk · 07/10/2021 16:01

His girlfriend has absolutely no right to insist on buying into a successful business. Your husband has every right to refuse that.

Original poster
KimmyKimdoo · 07/10/2021 16:02

DH doesn’t want any employees and is happy running one site himself. If partner wants to employ his girlfriend, that’s his issue right?

OP posts:
HollowTalk · 07/10/2021 16:02

Your husband and his partner have 50:50 say - your husband needs to speak up about the location of the new place.