Can my partner reopen my business with someone else in the same location with the same name and concept?
My small, unique restaurant (LLC with 3 equal members & contributions ) is in debt and facing eviction. If evicted landlord will allow my partner to continue without me. Partner has interested investor who will pay off existing debt and wants to reopen the business with my partner under a brand new company but in the same location, with the same business model and with the same concept. They are probably planning to use the same name. Partner refuses to buy me out. If evicted we are required to leave our property. My partner says he will dissolve our current LLC. Can my partner then reopen a new company with someone else without me or without my consent. It will clearly be the same business that I co-founded.
4 Answers from Attorneys
Realistically, your question cannot be answered without first reviewing the LLC's operating agreement to determine the rights that you and your partners have. This is the first step to figuring out how to proceed.
This review is not too costly and will only take a few hours at the end of which you will have a much better understanding of your options. I invite you to contact my office at your earliest convenience so you can start getting some answers and relief!
Roman R. Fichman, Esq.
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Such action by your partner would violate the rule of Meinhard v Salmon, You can sue. He has to include you in the new company, buy you out, or face a suit to recoup all of the profits.
As noted, you should absolutely consult a lawyer in private to help evaluate the situation and offer a best course of action. Unless there was some agreement in place, your partner will likely not be able to use the same name without your permission. This is a trademark matter, and the name belongs to the business. Even if the business was interrupted as indicated, it does not mean that the trademark was abandoned.
That said, he quite likely can start up a new business and work out a deal in same location, but he cannot double-deal at the expense of the existing LLC. He has a duty of loyalty and care to the LLC and his other partners. You cannot protect a business concept, so he would be free to do something similar, but of course there may be aspects of trade dress and trade secrets that can be protected.
Again, this is something that you need to address with a lawyer in private. If you would like to discuss further over a free phone consult, feel free to contact me anytime that is convenient.
DISCLAIMER: this is not intended to be specific legal advice and should not be relied upon as such. No attorney-client relationship is formed on the basis of this posting.
All good answers above. Bottom line.... talk to a lawyer.
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