Staying Out of Fights With Business Partners | Franchise Law Blog

How to Avoid Partnership Disputes


Even the best, long-term partnerships can devolve into bitter disagreements. Partnership disputes can arise from many different situations but they most often involve misaligned management philosophies. Arguments can happen any time partners don’t see eye to eye on branding, culture, and growth strategy. If partners aren’t careful, their once productive relationship can become disruptive to business. 

The best way to avoid partnership disputes is to plan ahead. Failing to create a cohesive, unified plan for every partner and employee to follow can result in misaligned expectations, conflicted staff, unfocused branding, and operational deficiencies. These types of problems can lead to stress, profit-loss, and failed ventures. It’s important to know when a dispute is coming and how to avoid a serious issue.

The best way to avoid an argument is to plan ahead well before any problems arise. Before progressing from a trial period to actual implementation and work, create an operating agreement. In fact, it’s NOT advisable to make any major business or life changes to accommodate your new partnership without first signing an operating agreement. Make sure the agreement spells out your role in the company, what you will earn, and what protections are available for your position. Without this agreement, you will have less leverage in negotiations and less protection.

This is why you should invest in the expertise of an experienced New York City business attorney who can help create a sound operating agreement. The little you’ll pay in legal advice could save your partnership and business in the future. Your attorney can help you address worst-case scenarios such as what will happen in the event of a conflict. Without protection, a co-founder could simply remove you from the business. Like having a pre-nuptial agreement before marriage, it’s often necessary to have an agreement in place to protect your best interests.

It is also important to address your concerns with your business partner and acknowledge potential issues. By keeping an open dialogue and by planning ahead, you can avoid partnership disputes that can hurt your business.

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Category: Partnership Disputes

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