“Yeah, the deal’s definitely going to be done this time around”. Twiny and Joe had concluded discussions on how to manage the franchise rights. They seem ready to live happily ever after. So, they would share the costs of the capital expenditure and operating expenses: 50/50 for a period of 4 months after which they expect the business to fund itself. Profits will be shared at the same ratio as each party’s cash investment and input into the venture.
The business took off as planned and things were running fine. Revenue was rolling in… Four months down the line, the goose that laid the golden egg was delivering and it was about time for Twiny and Joe to have a taste of the pudding. Time was approaching to begin to share the profits. Joe and Twiny had worked hard and they should reap the fruits of their labor.
Joe had travelled to meet with and sort a few critical issues with the franchise owner while Twiny stayed back as a result of business exigencies pertaining to the operation of their franchise. Joe was not quite sure what it was, but he felt he perceives a level of aloofness from Twiny recently, he wasn’t acting like his usual self or exuding his friendly vibes. Out of the blue, and in confirmation of Joe’s worries, there was tension between Joe and Twiny. As the date set for profit-sharing approached, the tension between them was getting more palpable.
The situation was made worse by the fact that both did not make the terms and conditions of the partnership clear in black and white (writing). Too much was left to assumption and casual statements made about what each party would like to see in the partnership, now things seem to be degenerating without any records for recourse. There was no written agreement at any point in time between both. I mean, why should there be when they were pals that had known each other since forever?
Now, Twiny is under the conviction that he’s the brain behind and the hub around which the franchise rotates, therefore the 50/50 sharing deal was not cutting it. Joe, on the other hand, is persuaded and he’s certain their acquaintances could testify that he was the worker-bee in the business – he was the one making it all happen.
Long story short, both great friends were having a strong sense of superior entitlement, each feeling that he deserves more out of the returns of the business than the other. But if Joe and Twiny had been more prudent to memorialize the terms and conditions that should govern the fabric of their commercial relationship, the fabric wouldn’t be so threatened in the midst of the impending good times. Both took the critical factor of putting the a-z and guiding principles of their commercial union on pen and paper for granted. They relied too much on the flailing memory and emotions of man in business.
Do you find yourself on this path or is the existence of your business already threatened by a similar situation of non-existing written agreement? Make this one of your cardinal rules – “have a clear cut and concise ‘terms and conditions’ in writing as your commitment in any transaction”.
Please ensure that the terms and conditions are crystal clear to you and that you are not trading your birthright for a plate of porridge. Of course, you should involve relevant #professionals to scrutinize the nitty gritty of this agreement. Don’t get caught in the web of avoidable conflict that would never have budded, with just a little more effort.
In summary, write down the vision you have for the #business: the what, how, when, where and why that you want to happen to the substance of the business – especially in cases of partnerships. Go and succeed as an influencer and authority in your business.
Have a fantastic day and week.