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Whenever there is more than one stakeholder in a business there has to be a way to govern the relationship between the various participants. There has to be a structure outlining the roles and responsibilities of the participants or the business will eventually fall apart. The larger the number of stakeholders there are the more imperative it is for there to be a structure that everyone understands and agrees with.
Buy-sell agreements, also known as a “business prenuptial” agreement, are often overlooked in the excitement of starting a new business and the certainty that the founders or partners will work happily together for their lifetimes. Often best friends, even family members, owners fail to consider the possibility that adversity can strike at any time.
During stressful times, tensions between a franchisor and franchisee frequently bubble to the surface, sometimes over trivial matters that explode into bitter battles before the bench. Going to court is the last, least desired option to settle a dispute. No outcome is certain. Before taking this final step, both parties’ interest is to resolve their issues before a trial is necessary.
