Family - Partnerships

[Le Core]

I am a part of a family business that has been an existence for 20 years. 8 years ago, we closed our franchise cafe and opened our own cafe. I was instrumental in developing the systems and everything that it takes to get a cafe that attracts tourists and locals. We are now at another stage where we are transitioning into a restaurant. I have created a new concept for the business that my parents agree to for the most part. I will be the face to the place and the energy that makes it run. As in most family businesses, I am underpaid and put a lot of sweat equity in the establishment. I own no percentage of the business or the building that houses the business. The value of the building is currently $400,000 but after renovations, I think the value would increase to $850,000. I am in conversations with my parents about percentage ownership in the business and building. What percentages should I request?

Thanks,
Le Core

[Steve B]

I'm assuming you haven't invested any money in the business at this point. If that's the case, I don't see how you'd be entitled to any of the ownership. Hopefully, you were paid appropriately for all of your time so far. If your parents are willing to give you some of the company in exchange for your new position - your pay would then be a combination of your salary and whatever portion of the business is negotiated. I know that doesn't answer your question, but it's hard to say without knowing your pay and the profitablity of the company. I don't envy you being in the position of working for your parents.

[vangogh]

If this wasn't a family business I'd agree, but since it is I'm not sure you aren't entitled to a % of the business. It sounds like you're working for less than you would get if it wasn't a family business and it sounds like you're starting to take over more of the work in running the place.

The thing is because it's a family business I'm not sure normal rules apply. Your parents, as parents, might be willing to give you a greater % of things than someone not related to you. At the same time I wouldn't think you'd want to play hardball with your parents as they are your parents. I'm assuming your relationship with them is more important.

If this is like a lot of family businesses at some point your parents will look to retire and at that time they would likely start transitioning ownership to you to continue the family business. Maybe now it's not so important to worry about how much of a % you get and just get something. Once you get some % it will become easier for your parents to see you as an owner of the business and give you a larger share.

[huggytree]

if i were your parents if give you 10% right now....enough to make you feel 'invested' in it.

you dont mention any other family members??? is it just your parents and YOU?

if so id increase your % every year as you improve the place.....and take % away if it goes downhill

what if your parents sell the business to someone else and give you nothing? i wouldnt expect anything from them, but its nice if they pass it on to you!