> Alain: We cannot collectively do anything
commercial,
> but partners can form commercial ventures on their
> own. That's is what you are suggesting, right?
Eric: Yes
Alain: Will these commercial ventures contribute
anything to the coffers of the group so that we can
become self-financing?
Eric: Forking/Splitting/Spin Offs. I used these terms
to indicate the development of businesses, later,
using different forms of organization, based upon
whatever openKard develops or does.
Alain: Forking means that a (rebel) subgroup is
branching off from the main group that maintains the
Standard Distribution, at the code level and/or at the
organizational level. They become a separate group and
cannot use our names or our reputation in the
furtherance of their goals.
Alain: Spinoffs are more like ventures that sell
products and services related to the Standard
Distribution and/or the products that this authoring
tool will allow people to develop.
Eric: There are essentially 3 business activites we
are looking at:
> Writing Software
> Writing guides to software
> Other end user support
Alain: I am sure we could dream up a few more, like:
> Value-added solutions authored with OpenKard ;
> Specific software tools developed (components) ;
> Value-added resale of OpenKard on CDROM ;
Eric: The partnership agreement I suggest would allow
all three activities to be undertaken, but would
require a different entity to do so.
Alain: OK.
Eric: My first draft would not include anything that
makes founding other partnerships that sell copies of
OC impossible.
Alain: OK.
> Alain: How about my suggestion that resale by our
> group could help finance our activities?
Eric: Resale of what?
Alain: Value-added resale of OpenKard source code, to
avoid download-times and so on. Just like RedHat does
with open source Perl.
Eric: Software? Support?
Alain: Yes. Yes.
Eric: The business entity in part or in its entirety?
Alain: No.
Eric: I really would recommend using two different
'vehicles' - one with no business purpose to develop
the ware and get things rolling, and then later
another which can do whatever you want.
Alain: Doctor knows best!
> Alain: Why a partnership:
Eric: 1) 'coz ya can't screw yer partner - you owe
each other a duty of loyalty.
Alain: OK, but I am not sure what that implies.
Eric: 2) 'coz the law _can imply a partnership - and
in law you are always better to have things in writing
and express rather than implied.
Alain: Good one. I forgot about that.
Eric: 3) so that metaCard can enter into a contract
with us for use of their engine.
Alain: The contract will be with Scott Raney as an
individual, not with his company MetaCard.
Eric: 4) money (business purpose) is not the only
reason for entering into a partnership, i.e.
charitable partnerships exist.
Alain: Granted.
Eric: 5) the risk of liability - in any business
venture is: torts (literally 'wrongs') and contracts:
Fortunately these types of liability can be limited
and are limited to Acts Pursued In The Scope Of The
Business. So we limit the business scope.
Alain: OK, except for the financing dilemna that it
raises.
Eric: Why partnerships are risky: Because your partner
cannot screw you but can be, well, wrong. With your
money. Oh well, you picked him.
Alain: I have only met two listers in person. Everyone
else is relatively anonymous. And I didn't pick them
either. (no offense intended whatsoever)
Eric: Because you are personally liable - i.e. you can
be sued for your personal posessions and are not
limited in liability to the partnership and its
property.
Alain: Ouch!
Eric: Why corporations can limit liability: In a
corporation, the corporation is only liable to the
extent of the property held by the corporation
Alain: This is precisely my point.
Eric: (though the individuals still could be sued in
fact if they were personally negligent - so it would
only protect you from a stupid associate and not your
own misjudgment).
Alain: That's fair. Non-risky.
Eric: So, why not use a corporation? Expense - they
cost around 300$ filing fee and about $1000 for
lawyers fee.
Alain: We could raise that much couldn't we?
Eric: Sure you can write it up and file it yourself.
Good luck. It is not impossible for a lay person (non
lawyer) to set up their own corporation. But it is not
easy.
Alain: A colleague of mine is an accountant that has
recently incorporated his business. He knows all of
the ins and outs of the process. And he would be
willing to help me if I asked him.
Eric: As you can see, drafting a corporation is a
hassle. Especially once you consider things like,
later sale, ownership, control, change of direction,
annual meeting, minutes, stock certificates.
Alain: This is indeed a little bit worrisome. The
whole bureaucracy of it all.
Eric: SO, that is why i think a corporation, for
practical purposes is definitely not the way to go.
Alain: What do you think now?
Eric: It is less expensive, less hassle...
Alain: Yes but more risky too.
Eric: and actually a greater amount of protection as
to your partners (corporate members owe each other no
duty of loyalty).
Alain: Being liable for everyone in the partnership is
not very reassuring.
Eric: I think that by limiting the business purpose to
creating the soft we limit any potential liability
Alain: Yes, but it prevent the group from doing some
non-profit commercial activities to make the group
self-sustaining.
Eric: To a layperson the quick answer is: corporations
offer better protection for a business operation.
Alain: Yes that is my layperson's understanding of it
too.
Eric: If you simply do not have the cash I then
suggest a Limited Liability Partnership for at least
$1000 (really should not cost more than $2500, plus
filing fee for DBA). And, if you still can't pay me, i
recommend a partnership, and again, at least $500,
depending on the complexity of the agreement.
Alain: If we had the money, Eric, what would you
suggest that we do? Would you suggest nonetheless
that we proceed as a partnership or would you favour
instead incorporation?
=====
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