Kaufman & Forman, P.C.
Call to arrange a consultation
678-957-7769 | 770-390-9200
Contact Us
practice areas

What is a founder agreement?

New companies are often launched in a dorm room or created over drinks with friends or colleagues. Perhaps one person had the concept, but it took bouncing problems off of someone else to come up with workable solutions. This subsequently led to a new company where they are partners. Despite this casual setting for the birth of the new endeavor, it is a good idea to get an agreement of ownership in writing at some point early in the process.

Terms to hammer out:

  • What is the percentage of ownership for each party?
  • What are the roles and responsibilities of each party?
  • Is the percentage of ownership is based on continued involvement in the company?
  • Do other owners have the right to buy out a partner that leaves? If so, what is the rate?
  • Are the owners entitled to a salary? If so, how much?
  • How will important decisions be made? Will it be unanimous or majority?
  • Does everyone agree that the intellectual property is owned by the company?

A handshake may not cut it

An informal understanding between the founders may be the foundation of the company, but it is important to carefully document the arrangement. It is also important to careful about how plans are discussed and keep track of discussions involving ownership and equity stakes.

If there is a parting of ways, this needs to be communicated clearly in writing. Include an understanding of who owns the idea and how it came to being. Outline who owns what in the dissolution of the partnership. As with so many agreements, it is best to get it in writing so the owner does not end on the losing side of a lawsuit.

No Comments

Leave a comment
Comment Information

Contact Kaufman & Forman, P.C. Now

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

get Legal Help Now

Kaufman & Forman, P.C.
8215 Roswell Road
Building 800
Atlanta, GA 30350

Toll Free: 800-461-5864
Phone: 678-957-7769
Fax: 770-395-6720
Atlanta Law Office Map

Review Us

Robert Kaufman has been selected as a 2013 Top Rated Lawyer in ‘Commercial Litigation’ as will be published in the May issue of The American Lawyer & Corporate Counsel magazine.Alex Kaufman has been selected as a 2013 Top Rated Lawyer in ‘Commercial Litigation’ as will be published in the December issue of The American Lawyer & Corporate Counsel magazine.

*AV Preeminent and BV Distinguished are certification marks of Reed Elsevier Properties Inc., used in accordance with the Martindale-Hubbell certification procedures, standards and policies. Martindale-Hubbell is the facilitator of a peer review rating process. Ratings reflect the confidential opinions of members of the bar and the judiciary. Martindale-Hubbell ratings fall into two categories: legal ability and general ethical standards.