Iinternet Coffee Shop

[erchess]

I want to be 50-50 owner of an internet coffee shop in Louisiana that would be managed by a friend who lives there. I would provide money and perhaps some input into plans and policies but I wouldn't spend much time there. If possible, I would like to limit my potential loss to the money I invest. (I would rather not be sued if my friend discriminates in hiring or firing or somehow rat poison gets in the pastries, and I don't want liability for debts of the business.) I might consider being a silent partner in a partnership or I might consider being an LLC or LLP if the laws in that fine state are favorable or even just a garden variety S-Corp that might some day revoke the S election when there were enough profits.

Our idea would be that half of the profits would be mine and half would be his. He would make a salary of 25K a year that would be a nonrefundable draw against his share of the profits.

Does anyone have any advice on entity choice or any other policies?

[Luis Mopeo]

I've only had two clients in my career who had coffee shops. Those were two of the saddest personal situations I've ever seen from a standpoint of sudden financial hardship.

I'm not saying coffee shops can't be profitable, and I know you'll due your diligence. Just be wary of the phenomenon where the perceived charm of owning a coffee shop doesn't square with the reality of how flipping many cups of coffee you have to sell every day to keep from losing your shirt. The cases I've witnessed close up went from "dream come true" to "nightmare" inside of a year or so.

[S T]

Well

Ice Cream Shops, Coffee Houses, or Pizza, etc.

Any of the above Franchises, or even if not a Franchise have I had the experience of a client/owner prosper. Between rent, product, (and franchise fees if any) and much needed payroll costs for employees, payroll expenses, (well I think you get the idea) Pretty much seems to eat up all of the "supposed" profits.

Your due diligence in looking into the income/expense on this business is a must. And I believe that you would have to take a look also at the day to day business operations, such as advertising, staffing of employees, purchasing, overall management.

These smaller operations can be done, and prosper, but it is an intensive labor of love of the owner who is on premises almost 24/7. Somewhat like your corner "donut shop".

Sandy