

Need advice on business relationship - jimmyjones

Here is the background. I have been working with a friend on a web based service for a little over a year now. He basically had a generic idea one night at the bar and over the course of the past year I have hashed out the business model and coded the application. We discussed eventual ownership and had agreed on the terms before we started. I have just learned, however, that he has incorporated the business as an LLC in his name only. After reading the business charter and other information regarding incorporation of a business, it seems that he "owns" the voting shares of the company and is planning on delegating voting or non-voting shares to me. From what I understand, it would have been more appropriate to be listed as a contributing member in the LLC charter. I was hoping someone in the community might have experience in this process. I am considering voicing my concern about this series of events but I would like to be better informed before that happens.
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pedalpete
If I were you, I'd take this as a very strong warning sign that maybe this
isn't the person you want to go into business with.

However, you may have an exit. What makes the company his company? Just having
a registered company doesn't automatically give him control of the code and
business. Who registered the URL (assuming you have one) who's been paying for
the server? Are there any other direct connections you have to the business?

Did you get anything in writting about the terms you had agreed to?

Have you approached your friend about your concerns? Before flying off the
handle, make sure that he truly is trying to change the terms. Hopefully it is
all just a misunderstanding, but be aware that from here on, you'll likely
have to protect yourself.

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jimmyjones
Thanks for the info. The code is currently hosted on my server so I have that
going for me. There is currently nothing in writing which has lead to the
predicament I am currently in. I am hoping that he is open to negotiation
because, as far as I see it, it would be more detrimental for him to lose the
business knowledge that I have gained from coding the app. Unfortunately, it
looks like the only way that I am truly going to be safe is obtain an attorney
which I was hoping to avoid. Thanks again for the reply.

