VIC Equity for the head chef in a new restaurant

[EddieMelbs]

Hi everyone,
I am an experienced chef and have been offered 10% equity on top of my salary in a restaurant that will open soon without any investment in return to take the position as a head chef.
I just want to know about my exposure in case of failure of the restaurant. What are the different options in terms of equity ? Am I going to be able to negotiate some conditions concerning the sell of the business if it would to happen ? Would I be able to include some conditions in fine prints in my employee contract ?
I am not too sure how this works and want to make sure I won't end up in trouble more than anything.
Thanks.

 

[Rod]

More likely to end up with nothing than in trouble.

There are many options available to you and beyond the scope of this forum to outline. I suggest getting advice before documents are finalised. Our firm can assist you, see my signature for details.

It is possible to negotiate terms of an employment contract and this is again something we can assist with.

 

[oakdean5]

I'm not a lawyer but have run my own sme for 30 years. If these people are decent & you get paid your salary & super ontime and you like what you do, and everyone operates within the award with upside (for you) variations agreed in writing, awesome. Talk of equity is usually just that. There is no equity unless a business is profitable. As head chef if the restaurant does well you'll have played a valuable part. Forget talk of equity, % of profit etc. Just agree if it does well your renumeration will increase x$s quarterly. Remind them regularly but tactfully. Not sure if opening a restaurant in the next 6 months is a good idea but buying some high end equipment from some of the places that go bust (when loads of mortgages go variable) prolly is.

 

[Tim W]

Hi everyone,
I am an experienced chef and have been offered 10% equity on top of my salary in a restaurant that will open soon without any investment in return to take the position as a head chef.
I just want to know about my exposure in case of failure of the restaurant. What are the different options in terms of equity ? Am I going to be able to negotiate some conditions concerning the sell of the business if it would to happen ? Would I be able to include some conditions in fine prints in my employee contract ?
I am not too sure how this works and want to make sure I won't end up in trouble more than anything.
Thanks.

1. These people probably don't have the money they need to start.
   If they did, they would be paying salary/ wages in money, not promising "equity".
2. They probably don't know what equity means. Shares in a company? A 90-10 partnership split?
   An unsecured loan in return for a profit share in lieu of interest?
3. If a profit share, how is profit calculated?
4. How often is this amount payable?
5. What rights do you have to see "the books"?
6. What is your role as "Head Chef" - for example:
   
   How many in-kitchen staff are you managing?
   What is the mix of sous, demi, prep cooks?
   What are your responsibilites in respect of any apprentices/ trainees?
   Are you expected to do the kitchen staff admin/ payroll?
   Do you have total control over hiring and firing?
   Do you have total control of the menu?
   Do you have total control of the choice of supplier(s)?
   Can your chef/ in-kitchen decisions be over-ruled because "they own more than you do"?
   How much say do you get over FOH operations (eg what if the MD is an ass?)

You need to lock all this and more down before the door opens.
In writing. In fact, it's a contract. You'll need case specific legal and accounting advice.
There are accountants and lawyers both who work in the hospo space.