Restaurant Legal Contract
This Restaurant Legal Contract (the "Agreement") is made and entered into as of [Effective Date], by and between [Name of Party 1], residing at [Address of Party 1] ("Party 1"), and [Name of Party 2], residing at [Address of Party 2] ("Party 2").
WHEREAS, Party 1 and Party 2 (collectively referred to as the "Parties") desire to establish and operate a restaurant business (the "Restaurant") located at [Your Company Address];
WHEREAS, the Parties wish to set forth their respective rights, responsibilities, and obligations concerning the operation and management of the Restaurant;
WHEREAS, the Parties recognize the need to define the terms of their business relationship to ensure the successful and profitable operation of the Restaurant;
NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
I. Ownership and Structure
A. Ownership Details: Ownership of the Restaurant shall be divided as follows: Party 1 holds 60% and Party 2 holds 40%. This division of ownership reflects the initial financial contributions and agreed-upon roles within the business. Both Parties shall share in the rights and obligations associated with their respective ownership percentages.
B. Business Structure: The Restaurant shall be operated as a Limited Liability Company (LLC) under the name [Your Company Name]. This structure provides liability protection for both Parties while allowing for flexible management and profit distribution arrangements.
II. Roles and Responsibilities
A. Management Responsibilities: Party 1 shall be responsible for financial oversight, including budgeting, financial reporting, and ensuring compliance with all legal and regulatory requirements. Party 1 will also be involved in strategic planning and major decision-making processes to guide the long-term direction of the Restaurant.
B. Operational Duties: Party 2 shall be responsible for the day-to-day operations of the Restaurant, including staff management, scheduling, training, and ensuring high standards of customer service. Party 2 will oversee menu planning, inventory management, and purchasing supplies necessary for the Restaurant’s operations.
C. Joint Responsibilities: Both Parties shall collaborate on marketing strategies, business development, and customer relationship management. Regular meetings will be held monthly to review the Restaurant's performance, discuss challenges, and make decisions regarding future actions.
III. Financial Contributions
A. Initial Investments: Party 1 shall contribute $100,000, and Party 2 shall contribute $50,000 to the initial capital of the Restaurant. These contributions will cover startup costs, including leasing or purchasing property, initial inventory, equipment, and any other expenses necessary to commence operations.
B. Ongoing Financial Contributions: Any additional capital contributions required for the Restaurant shall be agreed upon by the Parties and contributed equally within 30 days of the agreement to contribute such additional capital. This ensures that the financial burden is shared fairly and that the Restaurant has the necessary funds to operate effectively.
C. Profit Sharing: Profits shall be distributed on a monthly basis, with Party 1 receiving 60% and Party 2 receiving 40% of the net profits. This distribution aligns with the ownership percentages and reflects the initial investment and ongoing contributions of each Party.
D. Loss Sharing: Any losses incurred by the Restaurant shall be shared in proportion to the ownership percentages, with Party 1 responsible for 60% and Party 2 responsible for 40%. This arrangement ensures that both Parties share the financial risks associated with the business.
E. Financial Reporting: The Restaurant shall maintain accurate financial records, and monthly financial reports shall be provided to both Parties within 15 days of the end of each month. These reports will include detailed information on revenues, expenses, profits, and any other relevant financial metrics to ensure transparency and informed decision-making.
IV. Capital and Expenses
A. Capital Contributions: Any additional capital contributions required for the Restaurant shall be agreed upon by the Parties and contributed equally within 30 days of the agreement to contribute such additional capital. This ensures that both Parties share the financial responsibilities of maintaining and growing the business.
B. Expense Management: All business expenses shall be managed according to a budget agreed upon by the Parties. Regular reviews of expenses will be conducted monthly during management meetings to ensure financial discipline and cost-effectiveness. Reimbursements for any business expenses incurred by either Party shall be processed within 15 days of submission of the appropriate documentation.
C. Budget Approval: An annual budget shall be prepared by Party 2 and reviewed and approved by both Parties by January 31st of each year. This budget will outline expected revenues, operating costs, capital expenditures, and other financial projections to guide the Restaurant’s financial planning.
V. Decision-Making and Voting
A. Routine Decisions: Routine operational decisions, including daily staffing, purchasing supplies, and managing customer relations, shall be made by Party 2. These decisions ensure the smooth day-to-day operation of the Restaurant.
B. Strategic Decisions: Strategic decisions, including changes in business strategy, significant financial expenditures exceeding $5,000, or any changes to the Restaurant’s structure, require the approval of both Parties. These decisions are crucial for the long-term success and sustainability of the business.
C. Voting Rights: Each Party shall hold one vote. For routine decisions, a simple majority is required. For strategic decisions, unanimous consent is required. This ensures that both Parties have equal input in the decision-making process and that significant changes are agreed upon collaboratively.
VI. Term and Termination
A. Term of Agreement: This Agreement shall commence on the Effective Date and continue indefinitely until terminated as provided herein. The Parties commit to a long-term partnership aimed at the success of the Restaurant.
B. Voluntary Termination: Either Party may terminate this Agreement upon 60 days’ written notice to the other Party. This period allows for a smooth transition and orderly winding down of operations if necessary.
C. Involuntary Termination: This Agreement may be terminated immediately by either Party in the event of a material breach by the other Party, which is not cured within 30 days of receiving written notice of the breach. Material breaches include but are not limited to financial mismanagement, failure to perform agreed-upon duties, and violations of legal or regulatory requirements.
D. Dissolution Procedures: Upon termination, the Parties shall liquidate the Restaurant’s assets, pay all outstanding liabilities, and distribute any remaining assets in accordance with their ownership percentages. The dissolution process shall be conducted in an orderly and transparent manner to ensure all obligations are met and both Parties receive their fair share of the remaining assets.
VII. Dispute Resolution
A. Mediation: Any disputes arising under this Agreement shall first be subject to mediation. The Parties agree to participate in at least one mediation session within 30 days of a dispute arising. Mediation shall be conducted by a neutral third-party mediator selected by mutual agreement of the Parties.
B. Arbitration: If mediation fails, the dispute shall be resolved through binding arbitration in accordance with the rules of the American Arbitration Association. The arbitration shall be conducted in [City, State], and the arbitrator’s decision shall be final and binding on the Parties. Arbitration provides a fair and efficient means of resolving disputes without resorting to litigation.
C. Governing Law: This Agreement shall be governed by and construed in accordance with the laws of the State of [State]. Any legal action arising from this Agreement shall be brought in the appropriate court within the state, ensuring that the Parties adhere to local legal standards and procedures.
VIII. Confidentiality and Non-Compete
A. Confidentiality: The Parties agree to keep all proprietary and confidential information related to the Restaurant strictly confidential. This includes, but is not limited to, recipes, financial data, customer lists, and business strategies. This obligation shall survive the termination of this Agreement, ensuring that sensitive information remains protected indefinitely.
B. Non-Compete: Neither Party shall engage in or establish a competing restaurant business within a radius of 10 miles from the Restaurant location for a period of 2 years following the termination of this Agreement. Violation of this clause shall result in the offending Party paying the non-offending Party damages equivalent to 50% of the offending Party’s initial investment.
IX. Insurance and Liability
A. Insurance Requirements: The Restaurant shall maintain comprehensive general liability insurance, property insurance, and workers’ compensation insurance as required by law. These insurance policies shall cover a minimum of $1,000,000 in general liability.
B. Liability Provisions: The Parties agree to indemnify and hold each other harmless from any claims, damages, or liabilities arising from the operation of the Restaurant, except in cases of gross negligence or willful misconduct by the indemnified Party. This provision ensures that both Parties are protected from unforeseen legal claims and financial burdens.
X. Intellectual Property
A. Ownership of Intellectual Property: All intellectual property, including but not limited to trademarks, logos, recipes, and proprietary processes, created or developed for the Restaurant shall be owned jointly by the Parties in proportion to their ownership percentages.
B. Use of Trademarks and Branding: The use of the Restaurant’s trademarks, logos, and branding materials must be approved by both Parties. Any unauthorized use of these materials by either Party shall be considered a breach of this Agreement.
C. Protection of Proprietary Information: Both Parties agree to take all necessary steps to protect the Restaurant’s proprietary information. This includes implementing security measures to prevent unauthorized access and ensuring that all employees and contractors are bound by confidentiality agreements.
XI. Miscellaneous Provisions
A. Amendments: This Agreement may be amended only by a written document signed by both Parties. Any proposed amendments shall be discussed and agreed upon within 30 days of the proposal, ensuring that changes are made collaboratively and with full consideration.
B. Notices: All notices required or permitted under this Agreement shall be in writing and delivered to the addresses specified above. Notices shall be deemed given when received by the other Party, ensuring clear and documented communication.
C. Entire Agreement: This Agreement constitutes the entire agreement between the Parties and supersedes all prior discussions, agreements, or understandings of any kind. This provision ensures that all terms and conditions are consolidated into a single, comprehensive document.
D. Severability: If any provision of this Agreement is found to be invalid or unenforceable, the remaining provisions shall continue in full force and effect. This ensures that the Agreement remains operative even if one part is deemed invalid.
E. Waiver: The failure of either Party to enforce any provision of this Agreement shall not be construed as a waiver of that provision or any other provision. This provision ensures that the Parties retain their rights even if they choose not to exercise them immediately.
Signatures
IN WITNESS WHEREOF, the Parties hereto have executed this Restaurant Legal Contract as of the day and year first above written.
Party 1
[Name]
[Date]
Party 2
[Name]
[Date]
