Can a minority partner be fired?

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Can a minority partner be fired?

There are 3 partners in a partnership for a small hair salon, 1 of the 3 is not doing the work or helping in anyway with running the business but expects the other 2 to do everything.

This partner has made poor decisions and has cost us more in screwups than he’s put into opening the business and is combative, whispers to his clients and has made work a nightmare for the other 2 partners. He’s been making us look bad to their clients and we wanted to know if the majority partners can fire and remove out of the salon.

Asked on October 20, 2016 under Business Law, Kentucky

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

You can't take away his ownership interest (and therefore right to get a share of any distributions, profits, or proceeds from the sale of the business, should you sell it) unless there is a buy-out agreement stating that an owner may be bought out against his will in certain circumstances. You also can't stop him from telling people he is an owner and therefore "representing" you in that way.
But you can exclude him from working there, from operations, from business decisions, etc. You can also fire him from any jobs he does and not pay him wages or a salary (though again, he's still entitled to a share of any profits, as owner). The majority ownership of a business may manage the business and make all business decisions, including firing a minority owner from any jobs or positions at that business and excluding him from planning, decision making, etc.


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