Are you ready to add a partner to your LLC? We’ve never talked with a gym owner who hasn’t considered this at least once. Gym ownership is amazing, and so is the entrepreneurial journey. However, it can be a grind. There are plenty of days when every gym owner thinks, “I just wish I had someone to help who was vested in the success of this business.” After all, no one cares as much as the owner.
Are You Making the Right Decision?
Adding a partner is a BIG DEAL. You are bringing someone in and giving them power over your baby. You cannot take that lightly and there are a lot of things you need to consider. Here is a list to help you with some details once you’ve decided to bring someone in:
- How much of the company is the new partner buying? 50%? 40%?
- How much are they paying? Usually, a new partner would pay a percentage of fair market value. For example, if the company is worth $100,000.00, and the new partner is buying 50%, then the new partner should be paying $50,000.00.
- Who is going to manage the Company going forward? Will the two of you manage it 50/50? Or, do you want to maintain the final decision on everything?
- Who is going to fill which role? Usually, you want to designate the President, Vice President, Treasurer, and Secretary for the LLC.
- What happens if one of the partners dies? Some states allow you to control what happens to the LLC interest if one of the partners dies. Most form operating agreements say the LLC must be dissolved if a partner dies. Rarely do the partners actually want to that happen.
- Under what circumstances can you fire a partner? It is never good to talk about this when you are adding a partner, but you really need to. Firing a partner can be hard if the Operating Agreement doesn’t explain how, and under what circumstances, you can fire a partner for the LLC.
Beyond these considerations, every situation is a case-by-case. It is always best to work with an attorney to consider all of the other options and some that may be unique to you.