Business Partnership Advisor
Together, we can fix your business and partnership problems
Chris Reich, Business Luminary
5 Points to Consider When a Partner Is Locked Out Of the Business
My partner is a mess. He comes in late, leaves early, and doesn’t do any work. He makes us look bad in front of customers. I’m afraid he is going to take things from the business. He has used the company’s credit card lately for personal items. I have had enough and want to lock him out of the bank account and the business. Can I do that?
Locking a Partner Out of the Business
I get calls on this every week. Locking a partner out is a risky move. The locked out partner has rights that if violated could entitle him to reinstatement and damages. You are far better off negotiating a separation than risking a court action against you.
“If you are thinking about locking a partner out of the business, I advise against it. You are better off legally to negotiate a dissolution of the partnership.”
When the business partnership breaks down, the darker sides of the personalities come through. A dominant partner turns into a bully. A person who does not do well with conflict will withdraw. As the bully gets more aggressive, the pacifist withdraws further. Eventually, the bully gets so angry they are ready to lock the other partner out. The pacifist quits coming in. The next blowout is over money. The course is as logically predictable as what will happen to your car if you hit the highway with no oil in the engine. It will get louder and louder until the engine seizes.
I recommend that partners talk through a specific issue and then draft an agreement (called a resolution) that sets a policy. You can keep this in a binder to serve as amendments (or foundation) to your Partnership Agreement. In this post I’ll explain how to talk about things that bug you with your partner and how to draft a binding resolution to fix the problems.
Unless you are in some sort of political business, you should keep politics out of your establishment completely. Of course, you have freedom of speech, but we are in very contentious times and displays of political or religious positions might be off-putting to to your customers.