Running a Fish & Chips shop

[geek84]

Hi Folks

I’m thinking of going into partnership with a friend of mine who runs and works in a fish and chips shop, on which he has taken out a lease.

However, I have a full time job and no nothing about running a chippy. He said he will take on an assistant in my place, who will help him with the running of the shop, because (according to him) business is expanding.

Could someone kindly advise what issues/problems I would come against if I decided to go into partnership with him? I am also planning to do the accounts for him. What things would I need to take into consideration?

Thanks in advance for your responses.

 

[Scalloway]

Could someone kindly advise what issues/problems I would come against if I decided to go into partnership with him?

If it is an ordinary partnership, ie you will both be self employed, then I would say don't touch it with a bargepole. An ordinary partnership is the most dangerous business combination known to man. Each partner has the power to legally bind the partnership and each partner is jointly and severally liable for partnership debts.

So the worst case scenario is that your partner could end up making some poor business decisions, bankrupt the business, do a runner and leave you to face the music.

If you do go into business with your friend I would strongly recommend formoing a limited company. Get a lawyer to draw up a shareholders agreement and hire an accountant.

Chip shops are generally cash businesses with all the problems that entails. You need a good system to ensure every sale is accounted for and the money is paid into the bank.

 

[The Byre]

Chip shops are generally cash businesses with all the problems that entails. You need a good system to ensure every sale is accounted for and the money is paid into the bank.

That system has yet to be invented. Cash money? Trousers!

 

[geek84]

Thanks very much for your advice.

 

[RobinBHM]

Out of interest, what is your reason for thinking of going into partnership?

I was wondering if its due to friendship, or if it goes well you might join him full time.....

My advice would be: identify all the liabilities and estimate what that adds upto - for example a personal guarantee on a 5 year lease which is jointly and severally could see you liabke for £50k.

Other risks may include:
Personal injury claim from an employee -could result in HSE involvement and big fine
Employment tribunal fine

The restaurant and takeaway sector has a really high failure rate.......has this shop been running a long time.....quite a few years of books would be good.

On a side note our local and fantastic chippy does gluten free F&C once a month - it does quite well and brings in more business.
They also do great homemade tartare sauce.

 

[Mark T Jones]

The first question would be why do you think this is a good idea? What are you hoping to get out of it? What is this friend hoping to get out of it?

With regards to advice, the key thing by far would be forget being friends; this is an ongoing business relationship. You can be friends down the pub, in business you are colleagues/co-owners or whatever. If you don't work that one out I'd pretty much guarantee you won't be friends in 5 years time. For evidence; just look through threads ad nausiam on this forum.

Next, take time - lots of time - to work out between you what each expects from the other. 'I'm planning to do accounts' smacks of fall-out. How much time? What level of accounts? What rewards? These things are far better discussed when yu are getting on than when you are falling out!

And finally, get a professional partner/shareholder agreement!

 

[Chris Ashdown]

Not sure if its still going but there used to be a course held at Hull for the training a fish and chip shop owners where they tought everything you need to know to run a fish and chip shop

Might be worth considering as some f&C shops serve great food other only last a few years before going bust, guess its is not hard to be between the two extremes and be a indifferent shop

 

[The Byre]

I’m thinking of going into partnership with a friend.

First alarm bell!

he has taken out a lease.

Second alarm bell!

I have a full time job and no nothing about running a chippy.

Alarm bells numbers three and four!

What things would I need to take into consideration?

Things? OK, here goes -

1. That you should NEVER enter a partnership, be that common law or Ltd. partnership - the answer is don't! 99% end in tears!
2. Never go into business with friends. Or as Warren Buffett put it "A friendship based on business is far better than a business based on friendship."
3. If you rent/lease a shop, the only person with a real business is the landlord. You are sitting on the wrong side of the real-estate desk! One of the goals in business is to develop equity (i.e. net assets) so in reality, you two will be working for the landlord.
4. Never enter a business you know nothing about. There will be all kinds of gotchas (e.g. take cash for double chips, ring-up single chips) that you don't know.

"We seem to be going through too many potatoes lately, compared to sales."

"It's that rumbler. I think it takes too much off!"