Restaurant 101

The 101 to operating a restaurant, especially if you are in the venture with partners and/investors, is ... drumroll ... have a contract! Not rocket science I know. But I am still surprised how many of you out there that have restaurants went into it without a viable (and enforceable) contract. That said, most of you have been operating without one for years. It's easy to say that when there are no problems... Well, then there are no problems. 'We trust each other.'  Yes of course you do -- money and fame haven't sunk in yet and an issue hasn't arose. But when there is a problem, small or large, the contract - that operating agreement, partnership agreement, joint venture agreement, or what have you - will almost always solve that problem before it gets any more sticky. When there is equality in the initial capital contributions and each member/partner has injected the equal amount of money into the restaurant, a contract is equally important than say if one partner invested and the other handled operations. The reasoning is simple -- when a partner wants out, or wants to be a part of another competing business, or wants to get paid back on his investment by a certain date, or a partner wants to restructure (whether it's the menu, the look, or the delegation of power to employees) -- the contract will solve those issues and serve as the handbook, or the bible of the business. Your restaurant will not only run smoother, but you and your partners will have a peace of mind. Trust will only grow, and so will respect for each other's roles and liabilities. It's a lot more expensive and messy to litigate a divorce between partners without a contract or worse, with a contract drafted and negotiated poorly.