Do you know the best thing about running a business?

You can run it with other people...

But that's a curse and also a blessing.

Because you get to share the workload with some other person.

But that doesn't necessarily mean you are clear on everything that's to be done.

You might have some other expectations out of a business.

Your business partner might have some other expectations.

It can become a mess VERY QUICKLY.

Everything will make sense very quickly.

Just last month I had the opportunity to work with someone in the restaurant space.

My client was running a business together with his friend.

And because they were friends, they never had any formal arrangements, just like a lot of people.

But that had to change for them.

Mainly because they feared 3 cases:

1) They just wanted to make sure everything continued to go on smoothly - even in the future.

2) They both had a 50:50 ownership stake in the company. But they wanted a clear division of duties.

3) What if one person wants to leave the company? What then? They needed answers to that.

On the surface, these points might seem simple, but they cause the most issues in the future.

So our goal was to have something in place to tackle everything.

We started off by drafting a Co-founders agreement

In that, we specified their respective equity along with the power to nominate a director.

And also made sure to retain most of the power with major shareholders.

But still reserved certain decisions like the selling of IP for both co-founders, which could have a major impact on the Company.

Another thing was to focus on Contingencies

For example, if one co-founder wanted to leave. What then?

So we made sure that the exiting founder offered their shares to the other co-founder first, before third parties.

And also make sure, in case of such an event, the existing founder transfers the IP to the Company for the payment of his corresponding share in such IP.

We also prioritized the business interests.

We had to include a clause that made sure the Company wouldn't be affected, even if one co-founder wanted to leave.

We also inserted a provision for the exiting founder to get an undertaking signed by the transferee third party to make them agree to the same duties as the exiting founder.

That made sure, in case anyone does want to leave, it won't affect the operations of the business.

Miscellaneous clauses also included for non-compete, non-solicit, and protection of proprietary information.

Now with this one agreement.

And with those focus points.

Everything was set in place. This 1 agreement was enough to tackle any potential future challenges these two founders could face.

Proactively dealing with disputes that can end their business.

That's what this agreement does!

There were more small details that I skipped to not bore you with long texts.

But one thing is for sure - if you are starting a business with another person.

Or plan on running one.

Then the Co-Founders agreement should be your go-to agreement.

And if you need help with getting one drafted for your business, pick a time here.

»>PICK A SLOT«<

Talk to you soon.

-- Akhil Mishra