I’m in a 3-person LLC that runs a restaurant. I’m the head chef and handle most of the recipes and kitchen work. My two other partners have bought the building we were renting from under me. Now, our LLC is paying them rent through their other LLC. Is there any upside or downside to this? Should I form another LLC or charge them more for my work since I contribute about 75% of our income?
Did the lease agreement change? If it hasn’t, then the ownership change shouldn’t matter. It sounds like you’re upset that they didn’t include you in the purchase. Could you have bought in?
I get that. But they’ve been petty, leaving me out of interviews and articles. I also think they’ve been using LLC resources for their new business.
Also, I feel they should’ve been honest about buying the building. One partner told me he was looking into buying it for the LLC, but instead, he bought it for their own. They had plenty of chances to tell me, but they lied to hide it.
Get a lawyer.
Lawyers can be expensive. The partners might be reasonable or they could be difficult, but you should definitely try to work things out first before hiring a lawyer. Lawyers care more about billable hours than solutions, so you should make it a last resort.
No way.
If you’re in a business partnership with them, you need an independent lawyer to review the agreement. If you don’t already have one, it’s worth paying a small fee to find out if you’re being taken advantage of or not.
What legal grounds do you have for a complaint?
Maybe OP doesn’t have a case, but this sure seems shady. It’s a good idea to understand if it violates any agreements or not before deciding how to handle it.
It seems fair for you to negotiate a higher stake or more compensation for your role, considering how much you contribute to the revenue.
Have you noticed other ways your efforts should be more appreciated?
I think this is the way to go, especially if I’m not cashing out. I’ve earned it. I should also assess my value in other areas and come up with a fair number.
Have you thought about having them buy you out and opening your own place?
I’ve thought about it. I helped build the business and it’s been successful, but it relies on my work. It’s hard to walk away, but maybe it’s the best choice.
It just happened today, and we don’t have a lease agreement yet. Yes, I could’ve bought in, but I’m hurt that they weren’t honest with me. Now I feel less motivated and think I should just cash out.
Having a landlord who has an interest in your success isn’t the worst thing. Does the building have other businesses in it?
The best thing you can do now is start planning your exit.
The fact that your partners have this other LLC is just the start of possible future issues.
Here’s a plan you can follow:
- Stay in the current LLC for now.
- Keep being the head chef but try to experiment with new business ideas. Watch the business side closely and pay attention to any warning signs from the two-person LLC.
- Start a side hustle, either solo or with someone you trust.
- Look for other properties that could work for a new restaurant.
- Consider incorporating and buying or leasing a property. If you lease, make sure you can match any top offers for it.
- Retain your stake in the current LLC and eventually buy out the shady partners and their property LLC.