Mgmt Co is manager of restaurant co.as well as the majority owner and investor in the restaurant co. on the same terms as other passive members. Should the lease be held in the restaurant entity or the management entity which is a partnership between the two principals?
Corporate / Incorporation Lawyer
While its difficult questions like this without all of the facts and circumstances, the lease should probably be held by and in the name of the operating company. That said, I would recommend engaging an attorney prior to executing the lease, to ensure that its the best course of action given your business structure.
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The answer depends upon many facts not stated in the question. The first one is: why was the management company formed in the first place? Although that structure is often encountered, it is also adopted frequently without proper analysis of the benefits, if any. I think the main questions are (1) are the passive investors aware of the lease structure and do they approve? If the lease ends up having residual value, are the passive investors to share in that value? (2) what will the landlord allow? Will he allow an entity that does not own the entire restaurant operation to be the lessee?
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