Ken Freidman: threat or menace?

We all love a bit of gossip (and eater) right?

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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 he’s 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 don’t love reading that kind of stuff at all, although I do think it’s important to know.

It’s disappointing to hear that he was even involved in the restaurant’s opening (since he had already been accused of sexual harassment back in 2017).

Regarding his current role (or lack thereof), I think it’s 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 isn’t paying him in cash??? What does receiving a P&L statement have to do w/… anything?

Yes, but part of the issue is that one of the investors is claiming that Friedman “has never benefited financially from the restaurant, and will never benefit financially from Horses at any point.” 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? I’ll assume it was Friedman, and I’ll assume he did so b/c, outside of P&L statements, he’s probably has gotten any $ from the restaurant.

I’m 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 doesn’t show up on any legal docs, he has no claim to anything.

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Normal link:

Hypothetically, can’t make money from a profit share if the restaurant doesn’t 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:

“You’re sharing in the profits,” Light responds. “That’s when you get paid, after my investment is paid down.”

If he’s 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 didn’t get the message when they cut him out of the deal.

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Disclaimer: IANAL or an accountant.

There’s no contractual question since there’s no contract. What the heck does “paid down” mean (I mean that for Friedman to answer, not you)? 100% paid down? 50% paid down? It’s BS.

I assume a balance sheet would be much more useful in terms of how much Light’s investment has been “paid down.”

I don’t recall mentioning anything about a publicly accessible document. Assuming the texts are accurate, Light called Friedman a “silent partner.” Any type of documentation isn’t “silent,” IMHO. I assume there’s 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 I’m confused about the point of the article and what caused it to be written. Is it supposed to be an exposé 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 Friedman’s confusion about his (non-)ownership in the restaurant.

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Let this be a lesson for all “silent partners”, get a contract and get it signed.

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Yeah, or don’t think people are just going to forget the time when you settled a sexual harassment case for hundreds of thousands of dollars. :grimacing:

perfect example of a story where no one comes out looking good.

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This isn’t actually true. Contracts (except for certain types) don’t have to be in writing. Any verbal, behavior of the parties, or hand shake type agreement can be a contract but whether it’s provable is a whole other story.

It’s 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 “contract” will be enforced? I’m assuming very small…

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IAAL and I’ve 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 that’s 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. That’s 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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:astonished:

Especially film & tv profit participation deals where they charge interest on the unrecouped funding and multiple overhead fees.

:kissing_closed_eyes:

Lights’ investment is actually a loan from Light LLC bearing interest at 25% per annum.

“Silent partner” 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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Ooh… So what makes an oral agreement valid, though? Does one of the text messages need to say, “When are you [Light] going to pay me the percentage as we had agreed to?” Can Light alone make a valid agreement w/ Friedman?

Also, I’m 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, “We don’t expect to make a profit in the first year and so you won’t be paid for the first year, at a minimum,” would that make the oral agreement unenforceable?

Right. And Friedman never coughed up such a document for Eater’s review… 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 “Oral agreements: threat or menace” since it’s not about the food but is (IMHO) a really fascinating conversation.

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