I am an employee with a product idea and have come to verbal agreement with the owner of working together to develop, test and go to market if the idea has legs. We have agreed on a partnership equity split. At some point, if warranted, will create a new company just for this product but until then will be part of the current company. I am not sure how to go about drafting a partnership agreement in this scenario.
I agree completely with Ms. Martin's reply to you. I have also found that clients contemplating going into business together are well-served by first creating a Founders' Agreement. This contract is often a precursor to the company's operating agreement or bylaws. It lays out the expectations, obligations, and responsibilities of the individuals who are involved in the early planning of the enterprise. Issues addressed might include such things as: Does each individual plan to devote full-time to the business or does someone only plan to do this part-time? Will equity in the business be based on the money contributed? Will sweat-equity be valued and, if so, how? What role will each person play? Who will serve as CEO? Who will handle tax matters? etc. Having the conversation about these issues early and defining expectations can prevent a lot of headaches down the road.
This answer is for informational purposes only and does not create an attorney-client relationship. If you need legal advice, you should meet with an attorney licensed in your state.
There are a few different agreements you may want to consider. The first would be to have an agreement in place for the initial development and testing phase to clearly explain that your contributions are not as an employee and how the relationship will work at any stage moving forward. The second agreement would be a partnership agreement but that would be incorporated into an entity filing and the operating agreement (for LLC) or Bylaws (for corp).
I would speak with an attorney who can help you walk through the options and things you need to consider as you move forward. If you have already discussed the concept, I would get something in writing sooner than later that explains your part in the contribution and any ownership you have in the concept.
Good luck and feel free to reach out if you would like to discuss more.
The information provided in this answer is for informational purposes only and should not be construed as legal or expert advice which can only be obtained from appropriate professionals. Additionally, this answer does not create an attorney-client relationship.
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