If you are doing a business collaboration with somebody else, I always recommend you create an exit plan so that everybody knows where they stand. So that people know what’s gonna happen, either if things go wrong, or if you get an incredible offer and you want to sell out, or if one of you wants to sell and one of you wants to stay. As part of the exit plan and the business plan, I also recommend that you deal with intellectual property, because that can be a thorny issue at the end of the business relationship, so deal with it right at the beginning.
Is the intellectual property owned by the business or the individuals? What happens if you split from your collaborator and you want to keep using the name, but they don’t want you to? Or you don’t want them to use that name, but they decide they’re going to. Like grandma said, prevention is better than cure. It’s easier to put it in an exit agreement, because that helps you decide, at the time, what’s gonna happen.
Not everything in an exit agreement is enforceable, so you do have to bear that in mind. For example, if you say, “If I leave, I’m taking the trademark,” that might not be enforceable if the company owns the trademark and there’s no provision in the minutes of board meetings for doing that. So for the exit agreement, you need to make sure it is not just between you and whoever you are collaborating with. It also needs to include the company, if the company is the current owner of intellectual property or the trademark. My name is Cathryn Warburton, I am the Legal Lioness.
