Partnership Buying & Selling
- Corporate has first option to buy partnerships. CFDFA pg 31
- Remaining partners can refuse a legitimate sale (buyer and banks commit to all documents) for up to 6 months if they don’t like the new partner. However, if during the trial period remaining partner(s) refuse sale, they must purchase the partnership themselve(s) within 6 months of that date. CFDFA pg 31-36; BASA 4, 7OA pg4
- Corporate must approve any ownership transfers, but cannot disapprove unreasonably. CFDFA pg 31
- Potential buyers-in should have at least 2-3 years of experience. CFDFA pg 31-33
- A 10% corporate fee on all transfers of ownership will be paid by the seller in full at consummation of sale. FDD pg 7
- All partners must maintain life insurance on each other. CFDFA pg 34
- At the death of a partner, the required life insurance policy will buy the partnership from the family of the deceased for a price not to exceed 50% of his portion of collections (including hygiene) in the last 24 months within 6 months of the death, or at typical partnership valuation as determined and at discussion of Corporate. CFDFA pg 34; BASA 2-3
- If disability affects a partner, so that he/she can not come back to work at least 50% of their prior 12 month average production , he/she can be forced to sell out after six months. If the partner waits to inform of intent to sell, he/she will be bought out for only 50-80% of typical partnership valuation formula depending on how long he/she waits to decide. CFDFA pg 34-35; BASA pg 3
- Promissory note's terms are typically 10 years at 10% with no prepayment penalty. The seller and buyer are responsible for all financing sources. Often, the seller will self-finance up to 50% of sale.
- Partnership valuation formula: Equal to what a doctor can make in gross profit over 24 months (before loans and fees). Ultimately the seller decides, this is just a recommendation. If you make more then this, then you got a "good deal." Remember, there are no guarantees to income you can make. It is based on your ability to produce. Our systems are designed for each partner collect/producing at least $300 an hour.
| Recommended Purchase price |
Gross Monthly Profit |
| $700,000 |
$29,166 |
| $650,000 |
$27,083 |
| $600,000 |
$22,916 |
| $550,000 |
$22,916 |
| $500,000 |
$20,833 |
- Typical income calculator click here for download.
New Partner Sale & Trial Period
- Prospective partners should not work for more then 45 days as a associate before deciding or not to enter a trial period and become a partner.
- New partners should have at least a 2-6 month trial period.
- New partners must take out all necessary loans, and sign all paperwork at the beginning of the trial period.
- Monies from partnership sale or bank loans are put into a money market account at the lending bank's institution and cannot be accessed until the trial period ends and the partnership is consummated.
- During the trial period, the new partner receives at least a guaranteed flat rate pay (recommend $500 a day or better 30% of production). He can decide to switch to typical owner pay at any time, but can not go back once elected.
- While a buyer is on guaranteed pay, pay & loan amounts are paid by the sellers, but they also get any extra profits until the buyer makes election to switch to owner pay.
- Half way through the trial period, the buyer must switch to owner pay if he has not already elected to do so.
- Every month, the new partner is shown what his pay will be as owner pay.
- During the trial period, any one selling partner, or the buyer, can terminate the new partnership at any time.
- Whomever cancels the partnership, pays all loan origination fees. If the new partnership is terminated before the consummation date, all non-completed articles will be waived.
- If the partnership is terminated during the trial period, the seller(s) retain(s) any equity earned up to that point.
- The new buyer will only be paid as an owner once all training materials have been completed.
- The sale is only consummated at the end of trial period. This protects the remaining partners, and the buyer, by insuring that the selling price is sustainable and that the seller, the buyer, and the other partners all have motivation for a successful partnership. If the sale is not consummated, the seller must begin to sell again. If a legitimate sale is canceled by an existing partner, the remaining partners must buy that partnership within 6 months from the date of cancelation if they can't find another buyer before then. If they can't secure financing, they must use seller financing of 10% @ 10 years.