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Advice on Surviving Family Business

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With one great cheese ball quote after another, I'm so grateful to have grown on Archie comics. My first real guide to relationships and teen love -- ah, if only high school had really turned out to be so blissful, but alas, there were no Betty or Veronica's fighting over me, thought I do recall a lot of hamburger eating.

Still, the minute I see that freckly face and read those wholesome, yet lame zingers, it brings me back to the core of my childhood: sneaking under the covers with my flashlight after Mom tucked me in, just to get one more laugh before bed. As I grew up and entered my teen years, I remember trying out some of Archie's moves, only to get a good roll of the eyes from the opposite sex and ridicule from my friends. Now, as an adult, my affinity has persisted because of the sense of nostalgia it left me with.

After I became a lawyer and started my first business, I began seeing Archie through a very different lens. Who'd have thought ... there's an entire business empire behind the comic (a reported $40 million in sales in 2009)! Even better, though, it's not just a regular business, it's a family business, and we all know that family businesses are their own special thing. When the families are real (and not PG-rated comic family) it always makes for an exciting story, and this is one of the best.

There has been a colossal breakdown of the Archie family business, and it sounds like something right out of the movies; egos, lawyers, yelling matches, sexual harassment claims, defamation lawsuits and restraining orders. This one has it all.

It all started in the summer of 2011, when Jonathan Goldwater and Nancy Silberkleit (co-CEOs) sued each other. Goldwater is the son of one founder, Silberkleit is the daughter-in-law of the other, and they had been running the company together for a few years.

Goldwater's suit claimed that Silberkleit was creating a hostile work environment and was sexually harassing male employees. It is alleged that she walked into a room full of males and proceeded to point and scream "penis, penis, penis." Not only is she vigorously defending the suit against her, but she has claims of her own. In her suit, she alleges that Goldwater has defamed her, slashed her tires and defaced her website.

The lawsuits were settled on undisclosed terms in April of this year, but this has only led to another family dispute, this time between Goldwater and his nieces. Silberkleit controls 50 per cent of the company, but Goldwater only controls 25 per cent, with the other 25 per cent held in trust for his three nieces.

The terms of the settlement have been kept confidential from everyone, including the Goldwater nieces, and they are not happy about it. They claim that both Goldwater and Silberkleit have "dirty hands" and that the settlement shouldn't get court approval until they have had a chance to review its terms. They were told by the judge who approved the settlement to start their own lawsuit if they felt it was warranted, and they have indicated that this is exactly what they intend to do. So, as they say in the comics, the saga continues ...

It's quite the juxtaposition; a company that made its fortune producing content that promotes wholesome family values and caring attitudes, is now riddled with problems from within its own clan. And if you think this tale is the only one of it's kind, you're dead wrong. In fact, partnership breakdowns are far too common (maybe not to this degree, though). It makes me think of different measures that friends and family members can take when entering into businesses ventures together, to best mitigate future conflict.

Here are a few pieces of advice:

Concentrate on character. Make sure you know your partners before you make the commitment. You may have a great idea, and they may have the money you need, but make sure you know exactly what you're getting yourself into. As fortunes grow, people change; it's inevitable.

Define your roles early. This simple step will save you a lot of heartache and frustration down the road. There is nothing worse than being in a partnership with someone you think isn't pulling their weight. Talk regularly about your roles and responsibilities and adapt accordingly. Don't let it fester and never be afraid to have these discussions.

Make sure you have a partnership agreement. That's right -- get a lawyer. Spend the extra money and get a proper partnership agreement right at the beginning. Don't download a form from the internet and don't try any other DIY solutions to save a few bucks. It isn't worth it. A few thousand dollars up front is really a drop in the bucket compared to the tens or hundreds of thousands that you'll spend if the partnership breaks down in the future. As people often say, in business, you're going to have to pay a lawyer one way or another, so you might as well do it at the beginning and avoid costly ligation down the road.

Joshua Slayen is a lawyer and the VP of Business Development for LegalLinkup,com, the website that intelligently matches lawyers and clients based on needs and expertise.