Do I need a Founders Service Agreement?

A Founders Service Agreement, also called a Directors Service Agreement, is a contract between a founder of a company and the company itself, to define the founder’s roles, rights, and obligations as part of the founding team.

Finding a business partner who shares your passion for the business and who brings new skills and capabilities to the table is a dream come true for many entrepreneurs. But that doesn’t stop us worrying about the potential downsides if it doesn’t work out quite as well as we hoped.

A Founder Service Agreement provides you with the perfect opportunity to outline your expectations and ensure that your prospective co-founder is clear on what they are required to do. It helps to protect each founders’ interests and prevent conflict down the line. Crucially, it also gives your business the protection it needs to guard against common risks.

This Founder Service Agreement contains provisions regarding:

  • confidentiality to prevent the disclosure of your confidential information (such as client lists or business plans) to any third party, at any time;
  • intellectual-property assignment to ensure that all IP rights in work created by the co-founder belong to the company, including source code, designs, and research;
  • restrictive covenants to prevent them taking your clients, suppliers, or employees away with them if they leave; and
  • a vesting schedule that allows you to get back some or all of their shares if they leave (or are fired) during the vesting period (typically 2-5 years).

Become a Strand Sahara member for just £35 a month to access our Founder Service Agreement and many more agreements and templates for your business. Find out more here: Standard Membership

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