Nikhil bhagat (owner) 19 August 2014

Need help regarding partnership profits issue

This has always been a concern for me regarding profit distribution between partners.

Considering a contract of film production where A is only a financier (sleeping partner) and B is both financier and working producer (active partner). A is interested to become a partner in B because the concept of the film is a sure shot money maker and the guarantees multi fold ROI. A is investing 60% of total budget of project.

1) Main concern here is how the net profits should be divided. Considering 2 factors that , B is having an innovative and guaranteed concept and secondly B is will be working right from day 1 to day 200 till end the final product.

2) In such case how much more percent should B get apart from his 40% investment. How much percent for the intellectual networth , i.e the "concept" and how much for his actual full time work for next 200 days.

Thanks in advance.....

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2 Replies

Rama chary Rachakonda (Secunderabad/Telangana state Highcourt practice watsapp no.9989324294 ) 24 August 2014

For partner who invested, he can draw interest apart from equal ratio of profits in the business.

Arpit lalan (Legal Consultancy/Advocate) 26 August 2014

So in your case to answer:-

1. Main concern here is how the net profits should be divided. Considering 2 factors that , B is having an innovative and guaranteed concept and secondly B is will be working right from day 1 to day 200 till end the final product.

B should charge a Lumpsum amount besides the profit for this innovative and guaranteed work and for working from day 1 to day 200. (or a percentage of the net income realised)

2.2) In such case how much more percent should B get apart from his 40% investment. How much percent for the intellectual networth , i.e the "concept" and how much for his actual full time work for next 200 days.

Now thats what b should decide. that how much is his intellegince wort. and his hard work. accordingly strike a deal for the same.

No matter what all of the above should be documented. Legal paper! registered deed!