The Award Phase, Essay Example

Introduction

This paper presents the negotiation of the agreement between two entrepreneurs Chris and Pat, and two chefs’ martin and miller over the distribution of assets of the catering business that they intend to dissolve because of its poor performance and increased, loses which threaten its complete failure if the trend continues. The business as at the moment has $15000 left in the investment, the lease of the kitchen space which has 18 moth more on the run, the lease of the van which has 18 more months to run, and the lease of the kitchen which has 6 more moths to run. The above issues are the ones, which has to be resolved for a peaceful agreement to be reached on dissolution.

The splitting of $15,000 remaining capital

Considering the facts outlined in the case on how the business finds itself in the current state, the splitting of the remaining $15000 can take many perspectives. First, the chefs were the cause of the fall of the business due to poor management skills they practiced in the business. Just at the breakeven point of the business, the chefs changed the menus and began offering the more elaborate dishes with more expensive ingredients without increasing the prices. The dishes took a lot of time to prepare and cost too much limiting their ability to take more jobs. The behavior of changing the dishes without increasing the prices to match the quality of the dish as well as the time keeping time of dish preparation constant despite introducing dishes with took a lot of time to prepare demonstrates poor management skills from the chefs. This is led to the loss of $20000 via loses. Ideally, they should not receive even a small portion of the remaining$15000.

However, according to the agreement at the beginning of the partnership they were to share the profits equally which can also imply they should share the loses equally regales of who played a major role in causing the loss. They should split the money equally such that each of the two parties receives $7500 each.

The most viable solution is to take $10000 and let the chefs take the reaming $5000. This will sound a bit fair and human basing on the fact that even at the beginning of the partnership the entrepreneurs contributed more money than the chefs. Thus entrepreneurs are with the right to receive more of the capital invested in the business than their counterparts.

How to handle the lease of the kitchen space, which has 18moths to run

The kitchen has a lease of 18 months to run and must be paid. Because the entrepreneurs do not need to use the kitchen, they should opt to terminate the lease and pay the accompanying fees of $1,000 this is if the chefs also agree that they are quitting the business and they don’t wish to continue with it. But is they want to continue with it then the entrepreneurs should have the lease amended to remove their names at a cost of $5000. The option of accepting the promise by the chefs to pay the lease should not be entertained because in case they failed to pay in future still the entrepreneurs will be held responsible for the lease. It is better they terminate the lease or ramen it to remove their names from the lease.

How to handle the van lease which has 18 months more to run.

Because the entrepreneur have an intention to begin a business that will require a van, it will be good if they promised the chefs that they would pay the lease. However, this is not acceptable legally, to avoid future complications it is better that the entrepreneurs and the chefs terminate the lease and if any one party wishes to continue with the lease then it could be at their discretion. Money required to pay the termination of the lease should come from the remaining $15000 capital.

How to handle the ease of the kitchen equipment that has 6 months to run

The lease concerning the high quality kitchen equipments must also be addressed like the kitchen space. If the chefs wish to continue with the business of the cafeteria then there is no reason of terminating the lease and paying $ 1000. Instead, the entrepreneurs should amend the lease and remove their names from the lease. Alternatively, they may terminate the lease since; it is not accompanied with any penalties.

Summary

The above options should be considered if peaceful dissolution of the partnership is to take place.

Facts to guide negotiation of the assets include; both the parties were either directly or indirectly involved in the failure of the business and the must equally share the loses equally.

The outstanding leases should be terminated and both parties should pay a penalty imposed on the termination.

Chris and pat are cowards and incompetent in business. They should have given the business one more chance and try as much as possible to improve the management. Since they are he ones who are calling for the dissolution of the business while other partners want to continue they should be paid only a small portion of the capital,

The net asset of each party at the dissolution of the business should be calculated and each party to receive that which belong to them.