Founders Agreement



A founders’ agreement is a contract between co-founders of a company that lays out their respective rights, duties, and obligations.

Uses

  • Creating a new business with more than one founder.
  • Establishing a decision-making framework for business with multiple owners.

Overview

If you're starting a new business, it's critical to plan for the future. Entrepreneurs who start businesses with friends or co-founders may want to use a founders’ agreement to lay out everyone’s respective roles and responsibilities.

The more people involved in starting a company, the more likely it is that not everyone will agree about how the company should be run. A founders’ agreement creates a framework for decision making among the founders of a new company and provides a solution in the case of disagreement.

Unlike charters or articles of incorporation, founders agreements do not need to be filed with the state. Rather, the founders agreement should be maintained just like any other important business record, like meeting minutes or a corporate resolution.

An effective way to avoid future conflict is to make sure that you and all of your co-founders are on the same page with respect to ownership and decision-making authority. By using this interactive founders agreement, companies started by multiple owners can develop a clear and effective way to manage how important decisions are made.

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