We all love a bit of gossip (and eater) right?
Wow. That reads like a mess of a situation.
He also insists that his off-the-books ownership stake is still very much in play and that he regularly receives profit and loss statements
my guy is not an owner unless heās sending in checks when there are losses. a profit sharing agreement is not ownership.
lots of people receive profit sharing stakes for performing services.
Anyone know the local legal/accounting firms that specialize in this sort of thing? Asking for a friend.
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I donāt love reading that kind of stuff at all, although I do think itās important to know.
Itās disappointing to hear that he was even involved in the restaurantās opening (since he had already been accused of sexual harassment back in 2017).
Regarding his current role (or lack thereof), I think itās weird that he apparently refused to show Eater any docs that would support his claim (of either being an owner or receiving profit). I mean, surely the restaurant isnāt paying him in cash??? What does receiving a P&L statement have to do w/ā¦ anything?
Yes, but part of the issue is that one of the investors is claiming that Friedman āhas never benefited financially from the restaurant, and will never benefit financially from Horses at any point.ā So, regardless of ownership, there seems to be a question of whether Friedman is getting/has gotten any $ from the restaurant.
Who contacted Eater to initiate the investigation? Iāll assume it was Friedman, and Iāll assume he did so b/c, outside of P&L statements, heās probably has gotten any $ from the restaurant.
Iām assuming that the chef/owner and investors lied to him about getting payment/ownership/whatever and that they just used him and then dumped him when it became convenient. B/c Friedman doesnāt show up on any legal docs, he has no claim to anything.
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Normal link:
Hypothetically, canāt make money from a profit share if the restaurant doesnāt earn a profit. The key is what is the contractual definition of profit (ie do service charges count as gross receipts in the definition of profits, what type of expenses are allowable, etc)
From the article:
āYouāre sharing in the profits,ā Light responds. āThatās when you get paid, after my investment is paid down.ā
If heās just getting a profit share for services, why would he need to be on any publicly accessible legal doc? Guy just needs a contract between himself and Horses LLC or whatever.
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Soinds like he has nothing in writing, so maybe he didnāt get the message when they cut him out of the deal.
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Disclaimer: IANAL or an accountant.
Thereās no contractual question since thereās no contract. What the heck does āpaid downā mean (I mean that for Friedman to answer, not you)? 100% paid down? 50% paid down? Itās BS.
I assume a balance sheet would be much more useful in terms of how much Lightās investment has been āpaid down.ā
I donāt recall mentioning anything about a publicly accessible document. Assuming the texts are accurate, Light called Friedman a āsilent partner.ā Any type of documentation isnāt āsilent,ā IMHO. I assume thereās no contract w/ Friedman of any type, anywhere.
I assume sending Friedman the P&Ls were just the owners way of fooling Friedman into thinking he was somehow involved.
At any rate, to bring this back a bit to topic, i guess Iām confused about the point of the article and what caused it to be written. Is it supposed to be an exposĆ© on how someone who settled a sexual harassment case against them is involved in a hot restaurant? B/c it seems to be more about Friedmanās confusion about his (non-)ownership in the restaurant.
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Let this be a lesson for all āsilent partnersā, get a contract and get it signed.
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Yeah, or donāt think people are just going to forget the time when you settled a sexual harassment case for hundreds of thousands of dollars. 
perfect example of a story where no one comes out looking good.
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This isnāt actually true. Contracts (except for certain types) donāt have to be in writing. Any verbal, behavior of the parties, or hand shake type agreement can be a contract but whether itās provable is a whole other story.
Itās seems in this instance Friedman is arguing that through text messages, the behavior of the parties, and verbally they had agreed to a contract. While the owners of horses will say no contract was ever consummated.
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Yes, thank you for the correction and I do understand that contract does not require a physical piece of paper.
But I think you bring up what is ultimately the take-home point. If Friedman ever decided to sue, what are the chances that his understanding of the ācontractā will be enforced? Iām assuming very smallā¦
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IAAL and Iāve done my fair share of profit share deals, albeit not for restaurants, so take my opinion fwiw. Friedman could have the winning argument that there was a valid oral agreement to pay him 20% of profits. Absent a written agreement that says something else, profits would likely mean any money thatās left over after the revenues are sufficient to repay 100% of the funding put up by the investors to start the restaurant and to cover all the ongoing operating expenses, likely calculated on an annual or semi-final basis. Horses may very well not be at that point yet. Thatās setting aside the part about Friedman being a member of the LLC that operates the restaurant. If that were true he would indeed be a part owner, but there would also have to be written documentation.
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So basically never with a talented lawyer and accountant.
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Especially film & tv profit participation deals where they charge interest on the unrecouped funding and multiple overhead fees.
Lightsā investment is actually a loan from Light LLC bearing interest at 25% per annum.
āSilent partnerā often refers to a partner who is passive, usually just providing capital but not involved in operations or management. It does not mean that there is no documentation. I would expect most silent partners have explicit contracts governing their relationship to the venture.
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Oohā¦ So what makes an oral agreement valid, though? Does one of the text messages need to say, āWhen are you [Light] going to pay me the percentage as we had agreed to?ā Can Light alone make a valid agreement w/ Friedman?
Also, Iām reading online (dangerous, I know) that oral agreement in CA are not valid if the agreement, by its terms, cannot be performed within the first year. If one of the partners said to Friedman, āWe donāt expect to make a profit in the first year and so you wonāt be paid for the first year, at a minimum,ā would that make the oral agreement unenforceable?
Right. And Friedman never coughed up such a document for Eaterās reviewā¦ I assume the partners were planning to screw him over from the outset. Why he fell for it is confusing to me. He is not new to business interactions.
@robert: maybe split off all this off into āOral agreements: threat or menaceā since itās not about the food but is (IMHO) a really fascinating conversation.
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