The Award Phase - You Decide Catering Business Negotiation/Dissolution

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Week 5: The Award Phase - You Decide

Catering Business Negotiation/Dissolution

PROJ-598: Contracts and Procurement – May 2013
06/08/2013

1. How you will split the $15,000 left in the investment?
The decision on how to split the investment lies in the initial agreement between Pat and Chris Smith (owners) and the chefs (J. P. Martin and L. L. Miller). According to the original arrangement, they all agreed on the initial start up investment of $45,000. The accepted arrangement was outlined as follows: Pat and Chris Smith invest $25,000 and both chefs contribute $10,000 each towards the initial start up investment. Each successfully followed through on their agreement. In addition, their agreement outlined all profits after expenses would be split 50/50 between the owners and the chefs. Unfortunately, this second year has been tough and all parties have agreed to dissolve this business partnership.
There are several factors to consider when determining how this remaining capital of $15,000 should disseminate between the partners. First, it’s unacceptable to assume neither party shall walk away without some figure. As a reminder, the agreement was a 50/50 split after expenses. Second, I also don’t agree the $15,000 means $7,500 to the owners and each chef receive $3,750 since there are several lingering expenses still to accrue after this partnership dissolves. Someone has to continue paying on the leases for the store front space, van, the kitchen space, and the high quality cooking equipment. These are business expenses which will decrease the amount of the investment remaining ($15,000) once we determine how to establish their value.
I suggest we agree to a 50/50 split of the investment left after all expenses are accrued and paid for with the remaining capital in the business. This split is further defined as 50% to the owners to share…...

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