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Unread 10-07-2013, 08:39 AM   #18
Got Wood.

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Join Date: 12-07-11
Location: Newburgh, NY
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Other than the new rub I tried last night something doesn't smell right. In a nutshell this is the offer.

Gas station - owns smoker, runs all sales through his storefront, keeps 15% of gross. Are we talking sales or profits.

You - responsible for cost of goods, food prep, cooking.

At first I thought this was a sweet deal for you and then I realized the gas station has the sweetest deal. They get an added feature to their shop with zero risk. He also gets to control all the money from the sales. While everything sounds great in theory at the end of the day when you start putting out a quality product and making serious money i can almost gaurantee there will a storm brewing. To be the evil gas station owner, I have someone coming in willing to revive our bbq service. After 4 months you do, gas station owner says thanks but this set up just isnt working out for me and I am going to do the bbq myself. Don't think so, wait until you sell $1,500 in ribs compared to his $100 in burgers. He owns the equipment, the space, the business etc. You are just a contractor.

Yes you will recieve a 1099 but that is not a big deal. Unless the place does mega amount of sales (75k+) you will not have to file quarterly tax payments. He is assuming the sales tax liablity not you since his tax id is making the sale. Does he have a POS system to track the orders and what was purchased. Not to say people are dishonest but you can see where i am headed. You need to track for everything sold so you can make sure you get credit for the sale.

First and foremost you need to have a proprietary agreement where the BBQ name, rubs, sauces, recipes all stay with you. Again if Q-dat bbq is getting a name for itself and then he tells you to hit the bricks, Q-dat is technically the stations name. Secondly, come up with a set monthly overhead amount. Again when sales start taking off the owner will come back and say hey you do know you are using my water, electric, kitchen, etc. There is a value for that. If you have a set monthly amount he is owed now, it will not be an issue in the future. Give youself a few months free rent as goodwill from the landlord to get the business started.

If you want to go into business you have to assume some risk. Just purchasing the meat and rub is not risk, that's making lunch. The gas station owner needs to know you have some skin in the game otherwise he will view all the liability as being his. You need to tie yourself to the place.

My 2 cent suggestions.
1) set up your own llc, pay the gas station rent for the space you need. Operate the bbq as a cash and carry independant from the gas station. Problem is this is costly, setting up the business, insurances, permits, and purchasing the smoker from the landlord.

2) continue with your current set up. However to tie you to the place, do a rent to own on the smoker. Come up with an agreed price with the owner, and all profits made will go towards the agreed purchase price. Yes it is going to suck to work for X number of months and take home zero dollars. Ask anyone who has worked in the food industry, this is the norm for starting a new biz. At the end of the day you are reinvesting your profits back into the company to acquire an asset. That asset is your tie to the business and most importantly the Que. Difficult for the owner to tell you to leave if you own the smoker. However this option is a tough sell to the station owner because if he has any business sense he will know he just opted the leverage to you.

Good luck. This can be done and you can do it just make sure all your bases are covered. You want to have something at the end for all of your hard work.
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