3 ms·

We had a generous (no upfront fee) franchise agreement with a US-based partner, much bigger than us and for whom we were developing a UK-oriented version of the

We had a generous (no upfront fee) franchise agreement with a US-based partner, much bigger than us and for whom we were developing a UK-oriented version of their training products while also working on the main US version. They also agreed to fully fund a major marketing campaign in the UK. Under the franchise agreement, we'd only have to start making paybacks when our level of business hit a certain level of profitability. Marketing funds were delayed for 'reasons' and we forged ahead using our own cash - a mixture of business and personal. We soon had sufficient market penetration to hit the kickback level so we had to start making payments to our partner - but they were still dithering about the marketing money. Then business began to slow and, to cut a long story short, marketing assistance was withdrawn and we discovered that the US partner was directly approaching our customer base, despite us having a territorial agreement. The US partner company then adopted the stance that they were much bigger than us so we'd have no chance at litigation. Now trading while insolvent, we had no option to fold the business and lay off about 8 staff.

partisan 5y ago
Somewhat similar stories. We partnered with a customer to form a company that would serve their market and we formed a JV to sell it to other companies in their space. They were the investor. We brought strong domain expertise and technical skills. We provided a budget and timeline. They gave us half the budget we requested (amounting to half the people) and still had us stick to the original timeline. We invested our money to hire others because we believed in the product and potential. They subsequently cut our budget by almost half again and we painfully managed to maintain our team. When we were ready to start selling the product, they effectively used the hostile contract we had agreed to. By threatening to dissolve the company, they pulled the business away from us while trying to coax us into being employees instead of owners. We didn't come to an agreement and after a long and difficult process, the whole thing ended, we laid our team off, the software never saw the light of day, and our collective time and money was wasted. Lessons: - Listen to your gut. - A hostile contract lays out how someone can screw you over. Ignore it at your own peril. - Don't optimize prematurely.
high_byte 5y ago
completely not true. if they want to spend big on lawyers they can go ahead, sounds to me like a clear breach of contact, open and shut case any lawyer would gladly take and they will end up paying for fees as well. of course there's no "justice" you still lose a lot, but you don't give up for nothing, may end up with some compensation.

partisan 5y ago

Somewhat similar stories. We partnered with a customer to form a company that would serve their market and we formed a JV to sell it to other companies in their space. They were the investor. We brought strong domain expertise and technical skills. We provided a budget and timeline. They gave us half the budget we requested (amounting to half the people) and still had us stick to the original timeline. We invested our money to hire others because we believed in the product and potential. They subsequently cut our budget by almost half again and we painfully managed to maintain our team. When we were ready to start selling the product, they effectively used the hostile contract we had agreed to. By threatening to dissolve the company, they pulled the business away from us while trying to coax us into being employees instead of owners. We didn't come to an agreement and after a long and difficult process, the whole thing ended, we laid our team off, the software never saw the light of day, and our collective time and money was wasted. Lessons: - Listen to your gut. - A hostile contract lays out how someone can screw you over. Ignore it at your own peril. - Don't optimize prematurely.

high_byte 5y ago

completely not true. if they want to spend big on lawyers they can go ahead, sounds to me like a clear breach of contact, open and shut case any lawyer would gladly take and they will end up paying for fees as well. of course there's no "justice" you still lose a lot, but you don't give up for nothing, may end up with some compensation.