Royalty Licensing Agreement Partnership Investment

You say you want to invest in your officemate's business, but not how that business would use your money to enhance its profitability and make it worthwhile to pay you from revenues. Has he started marketing the software yet, or is this going to happen in the future? Are you interested in taking an active role in operating the business, or do you want only to be a passive investor? Has a business plan been generated? Is he open to having you as part of his company? Has he done this sort of thing before?

Do you get the CNBC cable channel on TV? If so, consider watching the show at 10 PM each weeknight: The Big Idea with Donny Deutsch. Donny regularly interviews folks who've started up profitable businesses and seeks to provide a "roadmap to the American dream."

Do I correctly surmise that you're interested in partnering up with your officemate? Beware that "general partnerships" are risky forms of business for each of the partners, and it's generally safer to set up a Limited Liability Company or a Corporation. Talk to a local lawyer about "choice of business entity."

Or maybe you'd do better just to become a distributor of his software. You'd make an agreement where he authorizes you to advertise and sell the software. The agreement might be exclusive, wherein you'd be the only distributor, or nonexclusive, wherein he could sell the software separately and could appoint other distributors as well. If the agreement is exclusive, he'd probably want you to make some guarantees, perhaps as to the minimum amounts you're going to sell each year (or other term) or minimum amounts he's going to receive regardless of how well you do in the marketplace.

Whatever you do, be sure to get all the commitments in writing, and it would be wise to get specific advice from your own lawyer. Good luck!

A,

You should talk with a business lawyer who can advise you on your best approach and also draft the agreement for you. You'll also want advice on how to limit your potential liability, if any, and a lawyer will be able to address that issue for you.

Best,

Valerie