Going All Out

You are an investor, even if you are not putting capital up. You are investing your time, knowledge, previous business and should be considered an equal partner just like they are.

Do not become an employee just taking a salary. You need to have an even playing field as you will put more into this venture than they will. If they are looking to do this they are seeing you as a capable individual who they feel will make them big profits on their money and do no work. If you do not consider yourself and your abilities worthy of being an equal partner walk away. They are dangling the proverbial carrot to someone who has the passion and ability to be profitable and are leveraging you with your lack of capital to buy in to become an employee.

What happens if you bust it out and it goes great and is turning big profits and they have another group that wants to buy them out at a huge gain and they take the money and run? Remember investors are just that, they invest their money to make money. They do not invest to be in business. They have millions to invest because they are savvy investors, not because they know how to run a restaurant catering business.

Please do not sell your soul to the company store. They could reap huge rewards and leave you looking for a job with the stroke of a pen. Your ability and time is your money to buy in as a partner.

I agree with thunderalley3 in that you have to get partnership out of this AND a salary. One thing to be sure to have built into this partnership/investment (and this maybe the most important thing you can put in it) is an exit strategy FOR YOU! Exit strategies are used for buyouts, unexpected turn of events etc. This will put some protection for you and your family so if things turn bad you won't be left holding the bag. Because trust me, the millionaire investors will definitely have exit strategies in place for them.

By all means, remember who has the talent and who will be doing the work. A salary is a good thing for the wait staff and the dishwasher, but not for the COO. Do not sell your soul for a place to work. Sweat equity is a very expensive investment.

Depends on the salary.

Lawyer up. Not to hold them up, but to protect you, your rightful share, and your IP. You need a lawyer to make sure that you own what you think you own. If the sheets get split can you work someplace else? If so, do you have to wait? If so, how long? Who owns the recipes you bring in with you? Who owns the recipes that are developed while there? If you want a stake in ownership, are you willing to accept a stake in the debt if things go south? Willing to accept salary plus a cut of the profits, and preserve some options for growth and/or franchising?

Get an attorney. Talk to him, make sure he understands what you want. Everything is negotiable. If a deal that you can live with isn't negotiated, walk away. You are the talent, but they have the money. If you didn't need them, you wouldn't be asking questions here.

Also important is whether or not any of you have ANY restaurant experience? It doesn't mean that you can't be successful. If none of you do, it makes it a lot harder.

ETA: I just read the initial post again. An initial investment of 3-6 million indicates they want either a really, really big restaurant or have plans for multiple locations, or someplace with incredible costs and the risks that come along with that for a restaurant. Talk to them, exchange ideas, find out whether everyone is one the same page or not, but get a lawyer before committing to anything you may really regret. It sounds like a tremendous opportunity, and if it's the right fit could set all of you up for life with something you love.

All GREAT advice.....for me, I would want a % of the business along with a salary. If you get salary only, they can and most likely will cut you loose at some point in time and they will profit from all of your work and knowledge.
Just my .02!

Definitely get an attorney, and keep your methods/recipes to yourself. Make sure they know if they push you out, they're pushing out the product that's making them money.

Or send them down here, I could use an investor.

Have you ran a restaurant before? If not, I recommend hiring a GM that knows what they are doing and you control what you know.

Do you have experience in restaurants or currently run a food operation of some sort or just cook barbecue and they like your barbecue and want to invest? Will you just be a pitmaster and they hire someone to run the restaurant? I don't mean to be negative here, just want you to look at all sides of this before you are in too deep. I've often thought to myself what if someone came up to me with an offer like you have gotten and what I would do. While I can't answer that question really until there is actually an offer out there I have often thought that if I were to get an offer like this there is a good chance I would turn it down. My reasoning? Well I'mm running a small catering business that I built from nothing into a small six-figure annual business and I make the rules, I decide when to take a vacation when to run an add, buy equipment, turn down a job or take all I can get. Whatever happens, it is my decision and up to me. If I were to take an offer like you have gotten, those investors would OWN ME. I would become a small chunk of their operation and what they say goes. For me, that would go against everything that I got into this business for. I think the only way I'd be all in on this kind of offer would be if there was a crazy offer like 40% ownership and a huge salary. Otherwise, I'll keep being my own boss and building my business slowly like an oak tree.

HBMTN said:

Do you have experience in restaurants or currently run a food operation of some sort or just cook barbecue and they like your barbecue and want to invest? Will you just be a pitmaster and they hire someone to run the restaurant? I don't mean to be negative here, just want you to look at all sides of this before you are in too deep. I've often thought to myself what if someone came up to me with an offer like you have gotten and what I would do. While I can't answer that question really until there is actually an offer out there I have often thought that if I were to get an offer like this there is a good chance I would turn it down. My reasoning? Well I'mm running a small catering business that I built from nothing into a small six-figure annual business and I make the rules, I decide when to take a vacation when to run an add, buy equipment, turn down a job or take all I can get. Whatever happens, it is my decision and up to me. If I were to take an offer like you have gotten, those investors would OWN ME. I would become a small chunk of their operation and what they say goes. For me, that would go against everything that I got into this business for. I think the only way I'd be all in on this kind of offer would be if there was a crazy offer like 40% ownership and a huge salary. Otherwise, I'll keep being my own boss and building my business slowly like an oak tree.

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yes to this. I own and run a small bbq business (food truck and small catering). I've been approached in similar ways as the OP (no million$ though!) and have turned them down because they basically wanted to make me an employee and just take everything I know about BBQ and recipes for their use. Not what I got into this for. Now if they were offering ownership or a true partnership then maybe...

I've had offers to open restaurants and catering venture also because someone with money thought I was a great cook. I told one guy "you want me to quit my day job that pays $160,000 a year to work 7 days a week 18 hours a day for $12 an hour and 10% of the net profit and no equity in the business? That shut him up pretty fast. You got to also remember the nature of the beast and that new ventures like this, unless a franchise setup, barely make it past the first year. Life's to shot to as it is.

Tell them you wouldn't feel right just taking their money. You need skin in the game so you're motivated to succeed.

Caseyjoenz said:

Excellent advice from everyone. I have had some conversations with people in the past but this one got so real, very quickly. They were talking buildings, construction speak, and millions of dollars. I left the meeting bewildered...wow this can happen, but I am over my skis. I will be speaking to an attorney.

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I think this is the wisest move you can make. You simply have to protect you and your family from a legal and financial standpoint. There is some great advice in this thread. But ultimately (as you're doing) you need to go speak with a professional (lawyer). He/she will guide you in putting things in place to ensure you and your family are protected as best as you can be in a venture such as this.


Things to ensure are covered w/your lawyer:

*Partnership status (limited, general, etc.)

*Protection of any recipes

*Non-compete clauses

*Exit strategies in case of buyouts, going out of business etc.

*Ensure your share/% of the company's liabilities and expenses reflects your share/% of partnership in the company.

There is more stuff. I'll add to it as they come to mind. :thumb: