WNA Blog

Thu 8 Jun 2017

When Business Founders Fight and Have a Falling Out


Business Planning & Strategies

Over the last few months the media has picked up on the court fight that erupted between two founders of Grill’d, the burger chain group operating throughout Australia via a network of company and franchised operations. Unlike, many franchise systems, this network has more company owned than franchised stores in its’ 140 outlet chain network.

This fight has been taking place in Australia’s Federal Court as a result of what seems to have been the breakdown in these previously close friends working relationship and an argument over the business value of Grill’d, and how this value should be determined.

While the facts of this matter are still coming out, one definite is that the court process will likely be a long and expensive processes, with disruption to the network.

This situation arguably stresses the need for parties to ensure that from the outset of their business relationship they sit down when the relationship is good and set out clearly in writing:

  • the expectations, roles and rights of each other;
  • the business’s purpose and any restraints or restrictions on management and operations; and
  • what is to happen in the event of a death, dispute, sale and/or one party wanting to change directions, buy the other and/or exist the business relationship.

Nothing is guaranteed, and you cannot predict the future, but what you can do is seek to anticipate different scenarios and seek to create and put in place strategies.

Please note this does not purport to be comprehensive advice relevant to your circumstances. Consequently, specific legal advice for each of your circumstances should be obtained first before taking or not taking any action in respect to this area.


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