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How To End This Family's Farm Partnership Promise

How To End This Family's Farm Partnership Promise
Profit Planner panelists tackle farm family's dilemma of how resolve a partnership promise when the employment situation isn't working out.

American Agriculturist's Profit Planner panelists offer advice to submitted questions. Panelists include: Michael Evanish, business services manager of Pennsylvania Farm Bureau's Members' Service Corp.; Dale Johnson, Extension farm management specialist at University of Maryland; George Mueller, dairy farmer from Clifton Springs, N.Y.; and Glenn Rogers, University of Vermont Extension professor emeritus and ag consultant

Here are their abbreviated responses to a farmer who hired an in-law's brother with a "sort of" promise of him eventually becoming a partner. As it turns out, he's not a good fit for the business. Now, the "boss" is in a bind.

How To End This Family's Farm Partnership Promise

Mike Evanish: No one should ever make promises about ownership. You made promises that could and most likely will be very costly.

To determine how to proceed, your attorney will need to know:
•Have there been employee evaluations done?  If so, I hope they were poor.

•Has there ever been family meetings where his future in the business was discussed?  If so, I hope they pointed to issues.

•Has he ever been addressed as a partner, or given partner responsibilities?  I hope not.

Assuming he knows the situation, my best guess is that he's sticking around because of the potential payday, in the form of equity, when he becomes a partner. The next day, he can cash in. No matter how this is done, it isn't reasonable to expect it to end well.

Dale Johnson: Why isn't it working out? If it's a matter of profitability and the farm can't afford to take him on as a partner, you need to come together as a group and do a thorough financial analysis to understand why the farm isn't making enough to take on another partner.

There also was an implied promise by him that through his contribution of skills and resources, he would generate additional profit to justify his salary. It's ultimately Dale's responsibility to make the financial case for his partnership. If he can, then it's going to be ethically difficult for you to end the relationship. If he can't, then you aren't obligated to stand by your "sort of" promises. 

If the relationship still doesn't work out, help the man understand in what ways he didn't keep his promises and why the relationship must end.

George Mueller: Modern family farms must be run as a business to survive. Your son-in-law's brother should be given the opportunity to participate in a well-documented performance review process. Perhaps he'll be able to correct weaknesses preventing him from being accepted.

Family unity is essential to a smooth-running farm operation. Be sure there's a consensus among family members. It's important that your son-in-law believes his brother is being treated fairly and has been given a sufficient chance to prove himself.

Some folks aren't cut out for farming. If this is the case, you could be doing him a favor by suggesting a different career path. By redirecting his career path, you could be doing him a great favor. No one enjoys working where he isn't appreciated..

Glenn Rogers: Any time the question has "sort of" in the message, I get nervous. If it's not working out, your daughter's husband's brother probably is as aware of it.

Generally, the "promises made" were verbal, not in writing, and prefaced with items such as: "If things work out," or "If all goes well . . .".  Sometimes, that means there needs to be a re-organization, or "parting of ways". 

Remember, the farm comes first. Without the farm, that affected individual is out of a job, as are the other employees and owners. If the best solution is to go separate ways, then so be it.

See the panels' complete responses in July's American Agriculturist .

Got a question? Our experts await!
Email your question to [email protected]. All are submitted to our panel without identification.

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