Partnership Agreement Samples with Profit-Sharing

Understanding Partnership Agreements with Profit-Sharing

Partnership agreements are essential documents that outline the relationship between partners in a business. They specify roles, responsibilities, and how profits (or losses) will be shared. This is especially important in partnerships with profit-sharing arrangements, as clarity helps prevent disputes and ensures smooth operations. Below are three diverse examples of partnership agreements with profit-sharing that can serve as templates or reference points.

Example 1: Restaurant Partnership Agreement

Context

This example is relevant for two individuals who want to open a restaurant together, sharing both the operational responsibilities and the profits generated from their business.

The partners, Alice and Bob, agree to contribute equal capital to start their restaurant, “Taste Buds,” and want a clear understanding of how profits will be shared.

The partners agree to share profits and losses equally (50/50) after deducting operational expenses. They also outline how decisions will be made and what happens if one partner wishes to exit the arrangement.

The partners hereby agree to the following terms:

1. Partnership Name: Taste Buds
2. Contribution: Each partner will contribute $50,000 to start the restaurant.
3. Profit Sharing: Profits after expenses will be divided equally (50% to Alice, 50% to Bob).
4. Decision-Making: Major decisions will require unanimous consent.
5. Exit Strategy: If one partner wishes to exit, the other partner has the right of first refusal on the exiting partner’s share.

Notes or Variations

Consider including clauses regarding management roles, salary stipends, and how new partners can be admitted or existing partners can be bought out.

Example 2: Technology Startup Partnership Agreement

Context

In this scenario, two tech professionals, Carlos and Diana, are forming a startup to develop a mobile application. They want a profit-sharing arrangement that reflects their different contributions.

Carlos will be responsible for programming, while Diana will handle marketing and business development. They agree that their profit-sharing will be based on the amount of work and responsibility each has.

The partners hereby agree to the following terms:

1. Partnership Name: App Innovators
2. Roles and Contributions: Carlos will focus on software development, and Diana will manage marketing strategies.
3. Profit Sharing: Profits will be shared based on contributions: 60% to Carlos and 40% to Diana.
4. Operational Expenses: All operational expenses will be deducted from gross revenue before profit distribution.
5. Dispute Resolution: Any disagreements will be resolved through mediation before pursuing legal action.

Notes or Variations

This agreement can include equity options for partners based on performance milestones, as well as terms for intellectual property ownership.

Example 3: Real Estate Investment Partnership Agreement

Context

This example is suitable for partners interested in real estate investment. John and Lisa plan to invest in rental properties and want to formalize their profit-sharing agreement.

They have agreed that one partner will be more involved in property management while the other will handle financial investments and strategy.

The partners hereby agree to the following terms:

1. Partnership Name: Prime Properties
2. Investment Contributions: John will invest \(100,000, while Lisa will invest \)50,000.
3. Profit Sharing: Profits will be divided based on initial investment, resulting in 67% to John and 33% to Lisa.
4. Management Duties: John will manage the properties, while Lisa will oversee financial strategy and reporting.
5. Reporting: Monthly financial reports will be provided to ensure transparency in profit calculations.

Notes or Variations

Consider including clauses on reinvestment of profits, additional capital contributions, and exit strategies for selling properties or buying out partners.