Poor Partnership Idea

Naomi is a fitness instructor. Another local instructor has offered to enter a partnership with Naomi. Naomi offered to be a subcontractor instead. What's the best way to split the profits from the business?

QUESTION: Naomi in Dallas is a fitness instructor. Another local instructor has offered to enter a partnership with Naomi. Naomi offered to be a subcontractor instead. What’s the best way to split the profits from the business?

ANSWER: Why don’t you just contract with her for 20%? I wouldn’t pay her 40%. You’ve got a 20% deal now. If she wants you over there, you are willing to do it for 20%. She dreamed up her fee out of thin air. She just made it up. It’s not like it’s federal law that she charges 40% and the other guy you are with charges 20%.

You are splitting 80-20 out of your fees in order to use a guy’s studio. You are her competitor. I think you can be a team at 20%. You make your 80%, and she gets to take a competitor out of the market. And you don’t have to fight with her anymore. You’ll get more students and she’ll get more students. Don’t overcomplicate this. You guys are trying to turn this into some big, hairy deal, and it’s not. You just need a studio, and she needs rid of her competitor.

I think you guys are getting more interwoven and interconnected than you should be. That’s what I’m hearing. I think you might be better off just to rent a little studio somewhere.

I’m really afraid of what you’re saying here, because you are assuming all of your clients are going to come over there, yet you’re going to charge them a whole lot more for services that they really didn’t want just to get signed up on her deal. Then they become her clients, and she doesn’t want you taking them from her.

I wouldn’t get into this deal. It doesn’t sound right to me. I think you guys are trying to cook something up here that’s wrong. I think it’s a good idea to back up from it and rethink the whole thing. Maybe not at all, but for sure don’t get caught up into some big deal where your clients are paying more. That’s a bad plan.

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