“If you can’t stand the heat, get out of the kitchen”.
The well-known phrase, designed to prevent individuals becoming embroiled in a position which carries too much pressure for their liking.
There are those who believe that the wording can be easily applied to business, ensuring that people stay within the limits of their talent, comfort and capabilities.
There are few instances when the metaphor mixes with the very literal and fewer still when the tensions created by such a situation have a considerable impact not just on a firm but also a family. One such high-profile example hit the news in January 2015, involving a well-known chef who now faces a considerable cost as a result of a dispute with his father-in-law over a restaurant lease.
The High Court dismissed Mr Ramsay’s claim that he had been duped into paying £640,000-a-year rent for a London gastro pub. Ramsay alleged that Mr Hutcheson had unlawfully used a machine which automatically reproduced a copy of the celebrity’s handwriting to ‘sign’ the lease.
As a result, Mr Ramsay will now have to pay £10.8 million over the course of the remaining 17 years of the 25-year lease as well as £1.6 million in outstanding rent and legal fees to date. The dispute had already seen Mr Hutcheson leave as chief executive of Gordon Ramsay Holdings. Mr Hutcheson’s daughter, Tana, had also given evidence in court against her father and brother.
Not all litigation involving families have such a value or a profile attached to them. Nevertheless, there is a lot of common ground between Mr Ramsay’s predicament and that of many other entrepreneurs who do business with relatives and end up seeking my advice when difficulties arise.
For me, embarking on a business venture with family members should be even more reason to ensure that all agreements are properly documented. The same can be said when going into business with colleagues or close friends. As unfair as that might sound, it avoids the temptation to cut corners just because you’re dealing with someone you know.
Courts and competitors will give companies no more leeway because there are blood ties between the people running them. My team and I have encountered many problems between siblings, parents and their children, and spouses arising from business ventures between them. My advice is clear; when going into business with a family member, take advice on the structure, purpose and intentions of all parties, and document it carefully. Hopefully you’ll never need to look at it again, but in case you do, you’ll avoid a lot of heartache.
As Gordon Ramsay can now attest, investing in a family business does not necessarily create the perfect recipe.
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