Who Gets Custody of the Clients in a Partnership Dispute?

You’ve worked hard building a business with a partner, only to have things come to an end. Whatever the reason for your dispute, before you dissolve the partnership completely, it’s important to consider your clients. If you do something that scares everyone away, nobody wins. There are ways you can close your business and retain your client base, as long as you plan ahead.

Consult Your Contract

Every partnership kicks off with a contract, and that contract should have a dissolution clause. If your relationship with your business partner is still amicable, stop everything and make sure this clause addresses how distribution of clients will work if the partnership ends.

If you’re already at the point of dissolution, however, take time to consult your contract. There should be verbiage specific to how your assets will be distributed. As you’re tallying the business’s assets such as account balances and equipment, include existing clients in that calculation and make it part of the negotiation process.

Consider a Mediator

Unfortunately, when it’s time for a partnership to end, things aren’t on the best terms. Even if you are still getting along well enough for professional purposes, you may not have a good enough relationship to make agreements. 

This is where a mediator can come in. An objective, professional third party can help you broker an agreement that will be best for everyone involved. Make a list of all of your active clients and let the mediator work through dividing them up. It may be that you agree to let your partner “buy out” your share of the business, taking the clients and business name in exchange for financial compensation to you.

Keep Communication Open

It can be tempting to say nothing to your clients and let them assume it’s business as usual, especially if the company will remain active after you finalize the dissolution. If your clients later found out you weren’t up front about things, though, they’ll feel deceived and may even choose to go with a competitor.

As early as possible, contact your competitors and let them know that you’ve decided to part ways. If the business will remain open, phrase it that the exiting partner is moving on to other ventures and that there should be no disruption to their account activity during the transition. This will help your clients see that there’s a change, but it shouldn’t affect the service they receive.

Although a partnership dispute is never easy, it’s important to make sure the clients continue to receive top-quality customer service. If they see few changes, they’ll likely remain loyal customers long after the split has been finalized.

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