it’s not uncommon for me to meet with a chef or gm who really believed they had some form of ownership in their restaurant only to feel like they were “screwed over” when a sale or transfer occurred and offered them no cash at the closing table and no job at the end of the week. are either of you getting a portion or all of the initial investment returned?

a profit-sharing agreement generally expresses the ratio you’ll use to distribute profits as well as how you’ll divide any losses. ratios may be determined by the amount of investment each partner put into the business or you may have an agreement that only divides profits, leaving you to take the hit for losses. you can divide the profits and losses in any way you want. for example, if you have three partners, you each can’t take one-half of the profits. perhaps you invested the most and plan to run the company; you might split profits so you get 50 percent and each partner takes 25 percent. your profit-sharing agreement should spell out sweat-equity payments if you are going to run the business.