It’s a business, there will always be up times and down times. There are risks at every step. The risk becomes even greater when you run a business with other people, such as the risk of breaking a partnership. Of course this is an unwanted thing. Because the breakup can destabilize and even destroy your business. Such a case happened to the famous steakhouse business, Holycow. Yes, people who love wagyu steak dishes are certainly familiar with this restaurant, right? But many do not realize that the name “Holycow” is now owned by two different restaurants. In the beginning, the Holycow restaurant business was started by Afit and Lucy and their two business partners, Wanda and Wynda. The restaurant business has been running since December 2009 with its first permanent outlet in Senopati. However, the joint business did not run smoothly until one of the parties chose to separate. The “Holycow” restaurant finally broke up in May 2012 with each party continuing to use the brand for its business. With the separation of the joint business, the “Holycow” brand is now transformed into two restaurant names, namely “Holycow! Steakhouse by Chef Afit” and “Steak Hotel by Holycow”. So, what causes a breakup in business? What are the legal provisions regarding this? Check out the discussion below.
Breakups and their Causes in Business
A business split is the process by which a previously unified company or business splits into two or more independent entities. The reasons behind a business split can vary, including differences in vision, strategy, internal conflicts, or the desire to optimize the value of the company. Here’s an explanation:
Differences in Vision and Goals
One of the most common causes is a difference in vision, goals or values of the business partners. If the partners are not aligned in terms of the strategic direction the business wants to take, then a breakup might be the solution.
Leadership Conflict
Leadership and decision-making disputes can be the cause of a breakup. When partners have different views on how the business should be run and who should take over important roles, this can lead to insurmountable conflict.
Poor Business Performance
If the business is experiencing a significant decline in performance and the partners cannot agree on how to fix it, then a breakup could be an alternative to salvage part of the assets or stop the losses from continuing.
Financial Differences
Disagreements on financial matters, such as funding issues or profit-sharing settlements, can trigger a breakup. This may involve disputes over how capital should be allocated or how debts should be dealt with.
Legal or Ethical Issues
Significant ethical or legal conflicts, such as violations of the law or questionable business practices, can trigger a business split when partners have different views on how to deal with them.
What are the legal provisions regarding the breakup of a partnership?
Based on Article 1 point 5 of Law No. 20/2016, ownership of the trademark is only owned by the registered trademark owner whose name is included in the trademark register at the Directorate General of Intellectual Property (DJKI). However, in the event that the joint business is dissolved and the joint trademark wishes to remain owned by each party, the ownership of the trademark is determined by mutual agreement of the parties. Ownership of the trademark can remain jointly owned as long as the registered trademark is registered as owned by both parties. However, it remains to be ascertained how the agreement made by the parties after the dissolution of the joint business. It is also possible, in the event that each party after the breakup still wants to use the same trademark, it can be determined that both parties remain the owner of the trademark, or one party as the owner of the trademark and the other party as the licensee of the trademark.
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Just like what happened in the Holycow case, since the brand was initially jointly owned, it was eventually agreed to be raised separately with a separation assisted by a certified mediator and a notary.
KH Contact
For KH pals who are currently running a business together and have the potential to break up, you can consult with Kontrak Hukum. We provide unlimited business services to help solve all business problems and needs, as if having a complete team only at Digital Legal Assistant (DiLA). The DiLA services include consultation, notary services, legal research, and official letters to the DJKI regarding applications in the event of a breakup. For service information, please visit the KH Services – DiLA page. If you have questions about other business needs, you can also consult for free at Ask KH or via direct message (DM) to Instagram @kontrakhukum.
