Legal Question in Business Law in Michigan

Forming a business partnership

My mother and sister are opening a new restruarant, but they do not own it, they are just running it. Because the restraurant is not making any money yet, the two owners want to form a partnership with my mom and sister. According to the owners accountant, this will elevate them from paying addition things like workmans comp etc. Since we have never delt with a partnership, I want to make sure that they are not getting roped into something bad. Is there any advise I should give them before they sign a partnership with these people?


Asked on 3/09/07, 1:22 pm

1 Answer from Attorneys
Patrick Tracy Patrick J. Tracy, Esq, P.E.,

Re: Forming a business partnership

In a partnership under Michigan law, all partners are liable for all debts and profits pursuant to the partnership agreement. It sounds as though they are being roped into something under the table. In the true form, these 2 people are employees and are not partners in the deal. I do not know if they are investors or are just providing their services. Thus I would advise them as an attorney not to enter into the partnership unless they get an equitable percentage of the profits. However, as I have said they could be responsible for the losses as well.

Good luck!

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Answered on 3/09/07, 1:30 pm


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