If I had a dollar for every time a client or potential client came to me and said that they did not need a written agreement for a business deal they were entering into with a friend . . .
It is all too common for friends who decide to go into business together to rely on that friendship rather than a good ol' fashion agreement. I often see the results of when the business relationship and the friendship sours. It turns into an ugly divorce!
A recent news article reminded me of how these relationships based on handshakes, oral agreements, and napkin scribblings often turn into a legal quagmire for those involved. The creation of Facebook was a fairly high profile example of how things can go so wrong without an agreement in writing. Now, Snapchat, Inc. is suffering the same malady.
The "founders" of Snapchat, Inc. conceived of their idea for what they hoped to be the next technology start up to make it big. They agreed to be partners via handshake in their undergraduate dorm room (at that school that shall not be named). The Snapchat "partners" later became embroiled in a bitter dispute when one founder ousted the other just as the company was going big. The "partners" settled their dispute sometime last year.
Now, the founders of the message board application Yik Yak, are squabbling. The common theme throughout these disputes are that the founders are either friends or family. Each side believes that the friendship or the family relationship is a strong substitute for a binding business contract. Unfortunately, that is a recipe for disaster especially when an event involving money occurs. More often than not, the event is a huge influx of cash (purchase by a larger company) and each of the partners wants to get their fair share.
Unfortunately, my clients get me involved when things go bad rather than at the beginning. Having clearly defined roles and goals at the beginning will save headaches at the end. It is important to memorialize your business relationship even if you are friends or family.
No comments:
Post a Comment