How to guarantee a percentage owed to referring business without given up partial ownership?
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How to guarantee a percentage owed to referring business without given up partial ownership?
I own an aquarium maintenance company. I am trying to contract with a local fish store to refer clients to us and in return we would give them 15% of what the client pays us. The owner is asking for partial ownership of my company in order to have legal access to our books to make sure that they are getting paid what they are owed. I want to avoid that at all cost. How do I guarantee them 15% they are owed, without given up partial ownership of my company to them?
Asked on October 12, 2018 under Business Law, Florida
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 6 years ago | Contributor
1) You have a written referral agreement for the payment: if you violate it, they can sue you. The agreement can include that in the event they have to sue to enforce it, you will pay their legal fees, as a disincentive to you to try to cheat.
2) The contract can provide for access to your records or books (at least the relevant ones for this purpose), so they can verify, on proper notice (e.g. 10 days notice to review the records) what they should be getting.
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