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Rocky Road-ish Indeed: What’s Ben without Jerry?
We’re reeling over the Ben & Jerry’s breakup. Here’s the scoop, co-founder Jerry Greenfield resigned from the company this past week. Which begs the question: now what? We actually have quite a few “now what?” questions to ask, in hopes that by us asking these questions, we inspire those of you business owners and business partners to ask similar questions. The answers to these questions should be in your partnership agreement, operating agreement, bylaws, or shareholder agreement. If they aren’t, perhaps it’s time to come to the table and have these conversations. If you think these business prenups are just Phish Food, think again.
What Happens to the Name?
Let’s face it: Ben’s Ice Cream just doesn’t have the same ring to it. Well, in all likelihood, Ben & Jerry’s parent company, Unilever, was careful to acquire the entire Ben & Jerry’s name. Remember when we asked “what’s in a name” a while back? When it comes to Ben & Jerry’s, the name is everything. So don’t stress, we probably won’t see Ben’s Ice Cream on the shelves any time soon. Though if you also had the same initial thought when you heard the news, consider whether your own business name has value, and if trademarking it is worth it. And if you do decide to file for a trademark, make sure you also reserve the web domain. Sneaky folks out there monitor trademark filings and hold domains hostage for a significant ransom. Crazy stuff out there, folks!
What are the Buyout Terms?
If you are in business with someone else or are generally one piece of an overall holding company/parent company ice cream cake, the hope is that you’ve discussed buyout terms in the event of an exit. It’s critical to ensure that these terms aren’t Half-Baked, especially if you are in a situation where one partner put in more time and money into the business than another and expects a higher payout. It’s better to answer this question sooner rather than later, and perhaps even revisit that answer as the business evolves and grows over time, than be stuck negotiating and renegotiating terms if someone walks away.
Who Owns the Business Assets?
An easy answer to this question is: the business. However, some partners want to keep ownership of certain assets or contributions they make post-breakup. You may even have a situation where one partner wants to keep ownership over the name itself. Imagine if Jerry owned all rights to the Ben & Jerry’s name, or if, bizarrely, he retained rights to his own name. That would have been quite the “churn” of events! Any expectations with respect to ownership of business assets both pre- and post-breakup should be addressed in the beginning, and most importantly, make sure you get it on paper.
Is Anyone Subject to a Non-Compete or Non-Solicitation?
Most likely! Ideally, you’d want to ensure that a partner does not resign (or worse, gets kicked out due to misconduct), just to turn around and compete with the business/steal clients the very next day. If your agreement does not have these terms, or you haven’t even discussed it yet, let’s talk.
Overall, when starting a business, it’s important to consider not just the landscape in front of you, but the worst-case scenario. Frankly, it’s a lot easier to have these conversations when things are going well, than when the road gets rocky. Much like it’s impossible to get an ice cream cone back to its original state once it goes SPLAT!, it’s tough to rewrite history when things go south. And as always, if you’ve got questions, you know we’ve got answers!
~ The W + K Team
ABOUT WEINSTEIN + KLEIN P.C.
Founded in 2019, Weinstein + Klein is a modern boutique law firm that serves as outside general counsel to businesses across industries. Weinstein + Klein provides strategic, day-to-day legal support with a focus on labor and employment law, corporate and transactional matters, and business litigation. Weinstein + Klein works closely with business owners, executives, and entrepreneurs to proactively manage risk, navigate complex employment issues, and handle key transactions – from formation to funding to exit.