Founders Service Agreement
An employment contract for company founders.
A Founders 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, including:⠀
- confidentiality provisions to prevent them disclosing your confidential information (such as client lists or business plans) to any third party, at any time;
- intellectual-property assignment provisions 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).
This agreement can be entered into at any time: the terms of the agreement may be agreed prior to incorporation of the company and the agreement signed either simultaneously with the incorporation process, or it can be created after the incorporation process as and when the founding team grows.
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We provide legal support for business issues, including contracts, intellectual property and company secretarial work. We do not currently provide dispute resolution, property law services or support for personal legal issues.
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Every business should have its own, tailor-made standard contracts for customers which reflect the way it does business.
Having your own standard terms will ensure that you’re able to provide the protection that your business needs and will enhance your reputation because customers will know what to expect from you and what happens if things go wrong.
To be effective, your standard terms must reflect the way you do business and protect your business from the specific risks you face. In contrast, we know that many businesses resort to relying on generic templates or re-purposing contracts obtained from competitors or previous employers. The problem is that these contracts often do not match up with your or your customers’ expectations and fail to adequately protect your business because important risks are not properly addressed. Poorly drafted or ill-suited contracts are often not worth the paper they are written on.