How Do I Leave The Family Business?

from the lobby of Ramsey solutions Jason

from Minnesota stopped by with a

question hey Jason how are you

you're good sir thank you good good how

can I help sir

well my father-in-law and I actually

co-owned eight fast casual restaurants

together and just created four tough

family dynamics and I actually called

you back in 2008 prior to getting into

all this and you told me not to do it

but here we are okay so eight

restaurants deep intermingled my

question is do I sell some of the stores

to create room from him or do I look at

maybe just a refinance we've paid down

quite a bit of the debt majorities SBA

loans but um

step one is just to get separation from

him on the business side okay does he

want out completely no he would still

own four and I would have force that's

been quite a conversation just to get

who owns what as far as where's middle


okay and how much is owed on the package

um some real estate involved also but

for the four stores I'd be looking at

would be around 800 okay and does that

include real estate no real estate on my

end but each store would be worth around

500 to 800 apiece okay all right so you

could sell one and have three free and

clear pretty close and you wouldn't do

that why um two of them in the same city

so I would sell them together one is in

our hometown which I would probably hold

on to and one of them I have actually

offered and it's kind of in some

conversation with Anna a manager has

been with me 10 years to possibly buy

that one so if he buys that one why

would you not have $800,000 from

well I could I could I just didn't know

from kind of a paid for real estate

piece once I refinance I feel like I

could really reduce the debt load fast

if I sell if you guys can split it off

and you end up with eight hundred

thousand dollars in debt in your name

not his name is that possible yes why

haven't you already done that I was

trying to come to an agreement as to who

owns what stores and with real estate

and family that way so you've got the

four picked out that you want he doesn't

want you to have those four no we've

agreed at that now so okay it's settled

it so thus far as the resigning is yes

separation not done nothing since f

Romania is the concept of the separation

all the decisions have been made right

yes you've got four stores he's got four

stores so you're asking me how to

separate from him and yet you've already

done it well legally I'm still on for

all eight I'm still on the hook for all

eight so I didn't know as my step one to

sell store where's my stuff i refined

who separated them why are you on the

hook for the other four

we've only separated by checkbooks

I mean I'm controlling the four

checkbooks but legally SBA loans leases

everything's intermingled okay so you

haven't separated then you still are

just with checkbook just operationally

is all but not an ownership stand for

correct okay and so how are you gonna

separate I mean I get how you could pay

off eight hundred by selling one or

getting close right of your four you'd

be clear except you're still

intermingled on all this other crap how

you gonna get out of that the stuff

that's on his for that's that's where

once there F of refinance is step one or

selling is step one then we can start to

change business names and start to move

forward with your name off of the leases

and the loans that are on his for it's a

verbal agreement at this point like I

say it's my father-in-law so no no no

are the banks gonna release you yes okay

when once the SBA's are paid off then

you take him on in just himself and I'm

taking him on as myself with four and

four opposed to

what are the SBA's the 800 um well 800

is just on the four that I would have

it's closer to two though I know are you

gonna get the other SBA loans paid off

on the four he has he would refinance

under himself so he'd be responsible for

that debt I just be assuming half of it

okay and why is that not underway it

took it took a while to get to the point

to agree on four and four but now we've

agreed when those that agreement

established um probably within the month

okay all right so he needs to go

refinance and get your name off the

SBA's he can get your name off the

leases as well you personally guaranteed

the leases I have contacts with all the

landlord so I would definitely start

there it's just a matter of get the

financing right then takes it up to yeah

well he's it's on him to refinance the

portion of SBA that's on those other

four stores you're waiting on him to do

that you can't make his decision for him

on that I would need to make it on my

four so I'm asking should I should sell

one of them that's what I just said yeah

yeah you know yeah I'll be out of debt

and I'd be clearing my father-in-law

yeah and uh you know what come what will

the manager buy that one store for that

you promised the manager mmm 750 okay

and you owe 800 so you need 50 grand you

probably borrow 50 grand on those three

stores yeah as a temporary thing and

then try and get it paid off and your

hundred percent debt free didn't

understand that right

Oh three home but business but you know

you own three stores free and clear yes

and you're free and clear your

father-in-law yeah I hear peace and

tranquility in your life brother

Thanksgiving dinner would taste

different yeah well I mean you know you

don't have any debt a year from the day

after you run through all this crap and

your but you have three paid for stores

that you know how to run and you don't

have a partner anymore that your

father-in-law I love this yeah that's

where you need to go yeah but you're

already here yeah but no I would not

refinance it and then try to pay off 800

grand that's what got you into this

dadgum mess is violating all these

principles of debt and partnerships so

go back to a clean life with no debt and

no partners and you're gonna love your

life and guess what in eight

to 24 months those three stores are

gonna generate enough for you to buy

another one probably because you need

stinking payments anymore you know I

mean by riding your butt all the time

you can just run the things properly and

don't have anybody to bother you no

bankers no father-in-law's if you if you

got all that off of you if you know how

to operate these restaurants you should

be able to make some serious Bank on

them these are franchises aren't they

correct yeah okay so that it's a cookie

cutter machine is what it should be if

you're not all weighed down with

relational and debt problems agreed yeah

it's worth it man

cut them one loose let the manager have

his store let him go get his money give

you 750 you owe 50 you clear that up

real quick

get off the SBA loan with the

father-in-law get off the leases with

the father-in-law and you're clear I

think I've got this straight that I

understand everything yeah you've got

majority of it that's what I want here

yeah thank you head to peace and

tranquility and simplicity

you will then operate much more

efficiently and more profitably and that

will cause your long-term prosperity you

are taking a small step back to be able

to take a whole bunch forward good

question thanks for joining us