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Should I relinquish domain name in business partnership?
domain name and website ownership
beachguy




msg:3911762
 12:08 pm on May 12, 2009 (gmt 0)

I've run into a problem in regard to an oral agreement on a new website business venture with a friend. For the purpose of this story, let's say it's to sell a special candy.

A friend and I had been researching different candies to sell. We talked about working on a business together once we found the right candy. My friend and I kinda let it go but he still keeps me in the loop about his research on the special candy. My friend moves on to find this special candy with someone else who has an "in" with the special candy company to sell it locally in our area. We will call him Bob.

I see Bob bring in the special candy. I try some and I like it a lot. I ask him if I could market it online. Bob says absolutely, we need that.

I go out into cyberland and find a domain name that works perfectly for the product online. Let's say it's specialcandy.com.

My friend gets upset to find out that I got such a great domain name for the product and proclaims he would have registered it if I hadn't. He asks for it back. I tell him it's not fair as Bob said I could market the product online and specialcandy.com was the best domain I could find to do so.

Bob, my friend and myself have a meeting to discuss how we can make it a win/win for all.

Because they see my past skills for running a successful online business and because they don't want to mess with that part of the business, it is decided they will make me a partner in the business, but only the online sales. Not the local sales. This would be spelled out in a contract at a later time.

It's agreed that we will jointly own the domain name for the business. That I will put them on the ownership of the domain equally.

My friend and I go and get the DBA filing (doing business as) and we open up a merchant account and business bank accounts. There is now a paper trail showing we are partners.

Over a month passes and a situation arises which brings up the ownership of the domain. My friend thinks I moved in on his business by registering the domain name, forcing him to partner with me. This was not the case. I was solely looking to market the special candy on my own. I just happened to get the best domain name for the candy.

He informs me that he has reconsidered and will not partner with me and move forward on the business unless I give him sole ownership of the domain name for the business.

He now wants to write up a separate contract stating that I will not be a partner on paper, but we will have a separate contract written up stating my role with their company. That role will be running and managing the online store and the website. They are willing to write in this contract that I am a shared owner in the online business, but not the domain or the actual business entity. It is also agreed we are gong to share in the web developer and monthly costs to run it.

The thing is, I'm already a partner on paper and he is back sliding on our original agreement. Again, no written contract, but paper trail with the county clerk DBA and the bank showing the partnership with signatures and all.

I do not feel comfortable giving up full ownership in a domain name that I am going to invest considerable time and money to develop. I'm also not happy they are now changing their mind about being partners on paper.

So my question is, would it be wise to invest time and money in an online business if you have no ownership in the domain of that business or the business itself? And, should I allow them to go back on their original agreement of me being a partner on paper and agree to being removed from the official documents as a partner?

What is the difference of having ownership in a domain vs. the website itself?
To me, the domain is the website as the website can change at anytime.

My gut feeling is not to move forward if they are demanding full ownership of the domain or to allow them to change the original partnership agreement.

Obviously friendship and money are at stake here.

One last tid bit, I had a solo meeting with Bob and when he did not get the answer he wanted, which was for me to give up the domain completely to them and to take me off the business documents with the county and bank, he threatened me in a passive aggressive way. Bob has stated to me he will only be in partnership with my friend. His name is on all the documents we signed with the county and bank, but not his signature for whatever that is worth.

Appreciate any advice anyone has to offer. Which I am sure will partly be not to go into business with friends.

 

buckworks




msg:3911868
 3:06 pm on May 12, 2009 (gmt 0)

My friend gets upset to find out that I got such a great domain name for the product and proclaims he would have registered it if I hadn't.

Yeesh! He dropped the ball about securing a domain name so he should be celebrating, not complaining, that you got a good one!

Anyone on the planet could have come along and registered the domain. It is folly for him to assume that it would have remained available for him to register at his leisure if you hadn't registered it.

Clearly you would bring knowledge to the partnership which they don't have for themselves. However, it doesn't sound as though they understand that or put much value on it.

I'd be extremely hesitant to invest much energy with these guys because they don't seem to have a clear vision about what they want, how to get there, or the value your knowledge could add to the enterprise.

Get legal advice. You acquired an asset with the good of the partnership in mind, so if they want to relieve you of that asset they should pay a fair price. You should be compensated for your time and expertise, not just the cost of registration. Expect them not to understand that, though.

Get legal advice.

Final thought: going into business with friends can work, but only if everyone is totally businesslike.

Jack_Hughes




msg:3912645
 3:28 pm on May 13, 2009 (gmt 0)

it depends how big it is potentially... if there is a ton of money that will make the whole thing worthwhile then don't relinquish ownership of the domain. If it is going to generate ordinary amounts of money that aren't worth a lot of hassle then sell them the domain and let them get on with it.

gpilling




msg:3916969
 6:32 am on May 20, 2009 (gmt 0)

that I am going to invest considerable time and money to develop

If you have not ALREADY invested a lot of time and money, then cut your losses. These people are showing their true colors before there is any profits. How will they behave when real money is at stake? You will be in a much bigger headache in a couple of years once real cash flow starts coming. I would walk away. Then I would start a new website specialcandies.com (people always search in plurals for some reason) and make my own business without them, if I was so passionate about these candies.

That'll give them something to sue you over later :)

caribguy




msg:3919570
 4:15 am on May 25, 2009 (gmt 0)

Don't walk away from this, run!

Agree with gpilling, cut your losses and find yourself another venture. Your "partners" are showing their greed before the business has even had a chance to start operating... If you can not trust the people you work with to recognize your value now, the situation will only going to get worse in the future when money (hopefully) is coming in.

Let this be a lesson learned for the next time: agree in writing (even if just by keeping minutes of your meetings) what each partner's stake in the business will be, what each person's responsibilities are and contributions (money, time), and most importantly: how dividends (if any) will be paid out.

Don't forget that each of you should receive compensation (salary) for any work done or time spent on operating the business - even if only on paper. You can agree to defer it or to each put in a set amount of time in return for shares in the company... That way, you can put a value on each member, shareholder, partner, whatever's input and prevent the issues you're having now. All of this should happen long before you formalize your business by opening bank accounts, getting a TIN number for the company, etc.

If you haven't changed the domain registration, then the most straightforward win-win situation is that the two others pay you an amount of money that makes you feel comfortable with forfeiting a business opportunity that was yours only (selling the product online). In case you already did, you probably did so with the expectation of benefiting from it. Again, you are being forced to walk away form the deal and it seems only fair that you get something in return.

Explain to your "friends" that it will be in everybody's best interest if they continue their venture without you and that you want to achieve a situation that everybody can live with. Since you were not asked to register it for the company's benefit and you had the intention to develop it as a separate venture, I would think that the domain belongs to you only.

If they want you to work as an employee or contractor, they should expect to pay a fair hourly rate for your skills. If none of you thinks there will be a conflict of interest you could still do this. However, if I were in your shoes I would not be open to such a deal...

Sorry for the length of this post :) Good luck with it and let us know how things develop!

callivert




msg:3919580
 4:33 am on May 25, 2009 (gmt 0)

Consult a lawyer before handing over the domain. If you give it up, it sounds like you would be giving in to petty-minded bullies, and there's nothing I hate more than seeing bullies get their way. But that's just me going on the bare bones description of the situation... talk to a lawyer.

tangor




msg:3919608
 6:36 am on May 25, 2009 (gmt 0)

Consult an attorney. Best advice possible. Meanwhile, if you are the admin on the domain, LOCK IT until all issues have been resolved.

Fortune Hunter




msg:3921324
 1:57 am on May 28, 2009 (gmt 0)

I agree with others, walk away. These guys are not the kinds of people that successful partnerships are made with. They are already trying to stick it to you before anything has really been done. By the way for what is worth good friends don't do this to each other either.

The sad thing is you will probably lose the friends or the domain depending on your choices and if you go into business with them you may wind up losing a lot more.

I would consult with an attorney to know your rights, but personally I would sell them the domain for a good profit and walk away.

LifeinAsia




msg:3921803
 4:10 pm on May 28, 2009 (gmt 0)

My friend gets upset to find out that I got such a great domain name for the product and proclaims he would have registered it if I hadn't.

Oh, boo-hoo for your friend. There are thousands of domain names *I* would have registered if someone else hadn't registered them first!

I pretty much agree with the others- your "friend" and Bob have shown their true side and do not sound like trustworthy business partners. A consult with a lawyer is definitely recommended.

Baruch Menachem




msg:3921877
 6:25 pm on May 28, 2009 (gmt 0)

I think running away is a good idea too. I think he is getting greedy-stupid over this. Toss in the domain name and run very far very fast away from this, having a very good lawyer do the paperwork on the escape. It strikes me they are an accident waiting to happen, and it shouldn't happen to you.

People who treat their friends this way are a very bad financial and emotional investment. Just tell them that they should find some other professional, because you a) got a better deal for your time (any random occupation is a better deal than this) and b) you are no longer interested in the project.

londrum




msg:3921881
 6:35 pm on May 28, 2009 (gmt 0)

sounds like he's getting over-emotional about this domain name. it's highly unlikely that the success of his business is dependant on that one domain name.

if he took a while to calm down think about it, he would probably realise that he could be just as successful with another name.

so i repeat what others have said... sell him the name for a tidy price before he figures that out.

aspdaddy




msg:3921980
 8:42 pm on May 28, 2009 (gmt 0)

A couple of things:

None of you owns or can own the domain name, doesnt matter who registered as the registrant could potentailly be changed even if you dont agree if it infringes a companies copyright or damages them.

I dont think its a good idea to partner in the online-only section of a startup. If you invest money in a startup you want shares in the 'company', if you only invest effort in one of its sales channels then wages or performance pay is normal.

Sounds like your 'friends' think its a bad idea entering into business with you ? Decide if your friendship is worth more than the potential earnings.

gpilling




msg:3922219
 6:09 am on May 29, 2009 (gmt 0)

My friend gets upset to find out that I got such a great domain name for the product and proclaims he would have registered it if I hadn't.

This just happened to me.. I was going to register the domain bing.com for a search engine and my buddy Bill just beat me to it. Damn him for being faster than me on the click!

On a more serious note, your friend was and still is a fool. Do not do business with fools. It hurts in the end.

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