We started a small retail shop in Fort Worth back in February. My partner handles the books and inventory, I handle sales and marketing. He told me last week he wants out before the year is up. No clear reason, just says he doesn't have the stomach for it. We haven't broken even yet. Our partnership agreement is pretty bare-bones and we never set up a buyout clause. Has anyone dealt with a partner leaving this early? I don't want to blow up the business but I also can't just buy him out with money I don't have.
Partnership
My Fort Worth business partner wants to leave before the first year ends
No buyout clause is rough. Did you at least put anything in writing about what happens if someone wants out? Even a one-page operating agreement?
Fort Worth here too. Honestly, if he wants out before the first year, let him. A disengaged partner is worse than no partner. The question is how much he thinks his share is worth. The bare-bones agreement is the problem, not hhis leaving. You might need to sit down with a local business attorney just to figure out what your options actually are. Could be cheaper than a drawn-out fight
lol @ "doesnt have the stomach for it" -- translation: he found out retail is work. Anyway, was there any cash he put in that you'd have to repay?
Seconding the attorney thing. Also check what Texas default partnership rules say when there's no written agreement. I'm not a lawyer but I think if there's nothing on paper you might be looking at dissolution unless you both agree otherwise. That's the scary part.
@plum_dumb that's what I was afraid of. OP, is the business an LLC or just a general partnership? Changes things a lot.
This is why you don't go into business with friends or family without paperwork. Not trying to kick you while you're down, but people are flaky. I'd get him to put his exit in writing: what he's owed, what he gives up, when. Even a napkin agreement signed by both of you beats a verbal handshake.
Also, if he's still doing the books and inventory, that's a risk. He could walk out and leave you with zero records. Get access to everything ASAP. Bank accounts, QuickBooks, vendor logins. Do not wait until he's already halfway out the door.
Tangential but: is the store actually viable without him? Because if the numbers are bad, maybe him leaving is the excuse you need to shut it down clean. Not every business needs to be saved.
It's an LLC, and yes, he put in about $8k to start. He's still logging into the books as of this morning, which is why I'm trying to moive fast. I'll start calling attorneys tomorrow. I hadn't thought about the default rules or him walking off with reCords, so that's helpful.
Good luck. $8k is not nothing but it's also not a reason to hand over half the business forever. Document everything before you talk to him again.