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Trust Breakdown
What to do when no formal agreements
FattyB




msg:4027290
 1:24 pm on Nov 18, 2009 (gmt 0)

Hi Folks,

Bear with me as this reads a bit messy...guess it is.

I co-own a few medium sized English language news sites. My business partner is German and he owns the other half.

He also works for a German company that does other work and he owns a bit of that company as well, though not much.

We decided to setup a German lauguage version of the main site. widget.de as a joint venture between our company and the one he works for.

So we set it up using our custom CMS, design etc. A copy fo the English site except for the content. We paid half of the bills until it moved into profit.

Now they had not been sending us half of the profit. I let it slip as thought it would be handy for corp tax at end of the year. Now they owe us about $12,000 and seem to have spent it propping up other parts of their business. They also say they are skint for the next while.

Now I have access to the ad network, Adsense etc so I know they are making about 6-10K per month in profit on the site and it is going up and they are getting the money.

My problem is what do I do. We host the sites, the brand, design, etc is all our own. There is no formal agreement.

One thing I don;t have access to is the German domain as it was registered by partner and he might have moved to German company or at least would put him hard position if I demanded control. On one side I do not want to cause a problem for him by taking agressive action and on the other I cannot watch this debt build into tens of thousands. I trust him 100% but not the company he works for.

A hard lesson being learned but what to do? I thought the worst case would be us trying to take over the site and then paying them any profit share - opposite of now. But they could switch the domain I guess, though they don't have server access to the site and it is massive. Would it have to be lawyers and ICANN for that?

I am hoping can resolve but was looking for feedback or if anyone ever had similar issue.
Thanks

 

httpwebwitch




msg:4027315
 2:17 pm on Nov 18, 2009 (gmt 0)

Communicate. Communicate!

Call your business partner, and talk about it.

But first, prepare yourself. Think about what you want to say, make some notes. Put down in point form all the facts, your claim of part ownership, the verbal agreements that you understood to be binding, and what you expect to be paid.

That way you won't be prone to make any emotionally fuelled threats or accusations.

As soon as you finish reading this post, go get some tea or coffee, sit for 10 minutes to gather your thoughts, then pick up the phone.

"Letting it slip" won't do you any good, and it tacitly tells your business partner that what he's doing is OK.

FattyB




msg:4027525
 7:42 pm on Nov 18, 2009 (gmt 0)

Thanks,

Yes, you are right. Will be chatting later tonight. Problem is that he is not in control of his side of things. I guess we will have to try and work out a repayment for them or something. Need to stop the build up of their debt to us.

But I will have to check legal options as well I think. I am hoping we are on strong ground as our site name, design, cms, logos, servers etc.

Jack_Hughes




msg:4028663
 9:31 am on Nov 20, 2009 (gmt 0)

Sounds like you need to be talking at least at director level of the company your German friend works for. Talking to your friend isn't very useful because he isn't the one making the decisions. Creating a proper legal entity for the site would be a good idea. If it is doing 10K per month then it would pay to place the site into a company with appropriate accounting and shareholdings in place. Would make things a lot easier. Problem now is that they can fight you legally with your own money.

FattyB




msg:4031528
 2:56 pm on Nov 25, 2009 (gmt 0)

Jack,

Yeah you are right. We should probably setup a separate Ltd in UK and have that own the site with us each having half the shares.

Meantime we have agreed going forward. So they will pay what they owe each month and next year will start to pay off the older amount owed as well.

However, formal arangements would have made this much easier to resolve.

Cheers
James

httpwebwitch




msg:4031563
 3:49 pm on Nov 25, 2009 (gmt 0)

James, I'm glad to hear that. Situation resolved, and a lesson learned!

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