Dissolving an LLC partnership on the basis of Conflict of interest

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Dissolving an LLC partnership on the basis of Conflict of interest

I own 70% of a restaurant. My partner that receives 30% of my profits just opened a competing Italian restaurant a mile away. This partner does not work nor have any hand in my pizzaria.Can I be rid of him based on his decision to open his restaurant?

Asked on June 17, 2009 under Business Law, Florida

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 12 years ago | Contributor

Does your partnership agreement say that  your partner can't compete? If it does, you can certainly enforce the condition. If it does not, then no...legally, a person can have an interest in, own, or control competing businesses, as long as there's not a contract or other agreement to the contrary.

Do you have any buyout clause you could use to buy him out? That'd be one way to go.

Alternately, can you make this work for you--can the two restaurants do cross promotions, joint advertising, joint sponsorship of local teams, give you a discount at one if you also eat at the other, etc.? If he does get 30% of your profits, then if there's a way to raise sales of both restaurants, he wins, so it should be in his interest, too.


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