Three years ago I started a small coffee roasting business with a friend. We were naive and used a template operating agreement we found online. It has no buyout provisions, no exit clause, nothing about what happens if one of us wants out. Now he wants to move to another state and I'm stuck with a business partner who's checked out but still owns half. I can't afford a lawyer. Has anyone dealt with this? Where do I even start?
Partnership
Our operating agreement has no exit clause and we're stuck
Ouch. That template probably also says disputes get resolved by "friendly conversation."
Pretty much. It literally says 'the parties agree to act in good faith.' That's it.
Your state's default partnership laws might fill the gap. In many places without an agreement, a partnership can be dissolved by any partner's express will. But dissolving and actually getting your money out are different things. You probably need mediation, not just a lawyer ngl.
Mediation with a guy who's already halfway out the door? Maybe. But he has no incentive to negotiate if the default rules let him just walk and leave you holding the lease.
This is why I refuse to go into business with friends. Also why I have no Friends. Problem solved.
Not a lawyer But I went through something similar. First thing: get the actual state statute in front of you. Search '[your state] uniform partnership act dissociation' and read the section on wrongful dissociation. If he leaves in breach of the agreement, he might owe damages. Also, send him a written proposal for a buyout now, even a lowball one. It creates a paper trail that you tried to resolve it. Courts like that.
Wait, if he moves states, does that even matter? The business is where it is.
It matters for jurisdiction if it goes to court, but not for the operating agreement. That's governed by your state's law. What matters more is whether he's still cashing checks. If he's taking distributions while contributing nothing, document that. It could support a claim for breach of fiduciary duty or at least give you leverage in a negotiation.
Also ceck if your agreement has a deadlock provision. If you're 50/50 and can't agree on anything, some states let you petition for dissolution. Not ideal, but it's a card to play.
And next time—well, there shouldn't be a next time with this guy—but if you ever do another operating agreement, pay a lawyer for two hours to review it. Cheaper than three years of this
Or just don't have a business partner. I keep coming back to this.