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Domain Partnership

How would you structure this deal?

1:39 am on Jul 17, 2007 (gmt 0)

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Long story Short:

I have negotiated a domain that is a premium five-letter placename that is a popular holiday destination for just short of 80K USD. The name is premium. Never had a site up, registered since 96.

I have not the funds to support such a sale atm and I am setting up a partnership. He is mostly a black hat seo/webmaster/domainer so I believe that this will be a good white-hat project for him to embark on.

Basically the deal is 50% profit share, he owns the domain and we split the profit on sale 50% after his intial outlay is removed. The domain has a lot of latent value and potential we can unlock fairly quickly.

He supplies hosting and pagerank and I develop (build, seo, link build) the domain. I have a lot of contacts and other sites that rank in this particular region's serps so it will be a very strong project.

Due to the fact I grew up in this region and it is in my favourite niche I would like to secure the domain and have the first option to buy out the domain when a sale arises.

Does this sound like a fair deal? What securities should I seek for security for my development? How can I ensure the domain price is fair for me to buy out and get the fairest price for the domain?

Fwiw, we both get along well and have a good mutual trust. I am thinking maybe a long-term arrangement where I buy back 50% of the domain and we are both shared owners.

Ideas/ help welcomed guys (I have only about 6 days left)!

[edited by: Bennie at 1:42 am (utc) on July 17, 2007]

2:36 am on July 17, 2007 (gmt 0)

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Put the terms of the deal into writing. It might be best to draft it together.

Before sitting down you should each separately brain storm about all the possible issues that may come up and when you meet you should discuss those issues and agree on a solution or approach.

When you have everything worked out I would suggest that you have a lawyer who has never acted at his lawyer or your lawyer "put on the finishing touches".

You may have to spend several hours working out the details and may have to pay for several hours of attorney time but in the end what you are aiming for is a structured relationship with a clear understanding of the who, what, when, where, why and how of the business.

Do me a favor: List up everything that you think should go into the written arrangement/agreement.

Caveat: Anything you say in a public forum can and will be used against you in a court of law when this deal breaks down and the knives come out. Are you sure you want to risk that?

Also, we ain't lawyers. Even those who may be lawyers don't post here in any legal capacity since law licenses are of "limited jurisdiction" - typically 1 State - and this place is Webmaster World.

4:00 am on July 17, 2007 (gmt 0)

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Thanks for the reply Webwork, I can see where you are coming from and you highlighted a few things I had not thought of. Cheers! *runs off to jot some notes*
4:24 am on July 17, 2007 (gmt 0)

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Make very sure you detail in the agreement the steps to take when something goes wrong. Usually one focuses on what goes right, but it helps to have a clear procedure if something goes awry.
10:58 am on July 17, 2007 (gmt 0)

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Make very sure you detail in the agreement the steps to take when something goes wrong.

I agree, this is really the key part of any contract (since, if everything goes right, you don't need a contract).

For example, in this case, what happens to the copyright on the content of the site if it is later sold to a third party? You (Bennie) should get something for that, if you are unable to exercise an option to buy the site yourself.

I had a deal where I sold a domain with content then continued to maintain it for a couple of years for the buyers for a monthly fee. In our one-page agreement I made sure there was a clause which stated the copyright on content remained mine until I was paid in full. They got behind on payments, had to sell it to a third party, but with that agreement in place the third party had to pay the owed amounts ($90k) direct to me to secure the content.