Legal Question in Business Law in Pennsylvania
I am reaching out for legal advice regarding a complex business situation, and I would appreciate your insights. Here's a detailed overview:
I am a co-owner in a 50/50 business partnership that includes a non-compete clause. Unfortunately, the partnership has a history of unequal contributions, with my partner consistently contributing less over the years, as acknowledged verbally. Despite numerous discussions and expressions of frustration over the financial outcome, there has been minimal improvement.
Recently, due to financial constraints and a desire for greater autonomy, I initiated a new business venture. The intention is to build a separate brand while still maintaining the current business, as I am dissatisfied with the financial returns and workload distribution in our existing partnership.
Over the past decade, I have been responsible for bringing in approximately 80% of the clients and handling the majority of the work in our marketing agency. Given the ongoing unequal contributions and financial disparities, I no longer wish to continue the current partnership arrangement. My goal is to grow my own brand independently while continuing to contribute to the existing business.
At some point, I had considered a buyout, but my partner's proposed amount is unreasonable based on the facts I have outlined.
I am seeking legal advice on the enforceability of the non-compete clause given these circumstances. Additionally, I am interested in understanding potential courses of action to dissolve the partnership in a fair and legal manner. While my partner has verbally acknowledged their minimal contributions, I want to ensure I navigate this situation both legally and ethically.
Thank you in advance for any assistance or guidance you can provide.
2 Answers from Attorneys
You have to tread carefully as an agreement not to compete is a contract, as you know, and if there's money on the table the counterparty is going to get a lawyer and nothing good can possibly happen going forward. But sometimes, and frequently, the provision is not written clearly, or is otherwise not enforceable. There's no way to tell without looking carefully at what it says and applying prior cases in your state to the facts. With respect to unwinding the partnership, your partnership agreement will dictate how that is done, and if you don't have one, then your state's laws will control. Hopefully the books and records for the business are solid. Of course you have to weigh the impact of winding down this partnership and having the value of the brand depreciated. It's a tough situation; best of course would be a win-win solution, but sometimes you can't get there without employing tough tactics. I remember when my dad's partnership failed and he recognize what a big mistake that was. So I'm not sure this has been helpful; it's all I've got in email format.
Good luck.
You really should be seeking some proper advice on this beyond what we could say here.
The best way forward is for the partners to agree to a dissolution or buyout. Otherwise, you end up in court and the lawyers win.
If you would like to discuss further over a free phone consult, feel free to contact me anytime that is convenient.
You can review our outstanding client reviews here: https://www.avvo.com/attorneys/10007-ny-frank-natoli-1791330.html#reviews.
And our firm is now referred by the American Bar Association (see under the New York section):
http://www.americanbar.org/groups/delivery_legal_services/resources/programs_to_help_those_with_moderate_income.html.
Kind regards,
Frank
Natoli-Legal, LLC
www.LanternLegal.com
866-871-8655
DISCLAIMER: this is not intended to be specific legal advice and should not be relied upon as such. No attorney-client relationship is formed on the basis of this posting.
Related Questions & Answers
-
How do I convert my LLC to a nonprofit in Pennsylvania? Asked 4/18/23, 1:26 pm in United States Pennsylvania Business Law
Looking for something else?
10,200 active attorneys ready to answer your legal questions today.
Featured Attorneys
Earn additional revenue and grow your business.
