legal, business-planOne of my close relative contacted me asking if I can do a ‘Shore Interface’(used on ships for management) project for him in .net after that he started talking about registering a company under us, saying “if required we can hire someone for coding”. Which makes me feel he only contacted me so he can register company with my help.
My concerns are, previously he did same project with his colleagues which never worked for them. These guys had big salaries, 2-3 times of well paid people. Initially they had contacted me to work on it but later they hired developers by paying them less than 1/4th of their salaries. Plus I don’t even think they had any original ideas for this project, as I was given account of their “future competition” and they simply planned to copy it. With this they planned to invest one time in development and probably thought of earning millions.
The guys they hired had 10 year old coding style, they used table for front end template, had ‘this website works best on IE at xx resolution’ at bottom, their template had fixed sidebar navigation which will push half of content out of screen. Later I got to see the code and database, they used college level login where they check two textboxes without much validation and passwords were not encrypted.
So my first concern is what kind of legal troubles I might face just by partnering in company registration especially if he hires somebody like those developers plus he has no respect for copyrights when using images etc on front end.
I am thinking that I will ask him to pay me certain amount for first six months just for development. If he goes ahead with it and wants to register company under us, I am not sure what kind of contract it will be. If I am not developing then I won’t be taking risk of registering either. I am not sure what will be the best way to say it to him.
previously he did same project with his colleagues which never worked for them
Do you know reasons why? Did they get bankrupt because of financial mismanagement, or there was something else? I do not think ship management system market is big enough, and there should be limited number of customers and small circle of people who may know, or at least hear of each other. If he has inadequate reputation on the market it is big red sign for cooperate with him.
Plus I don’t even think they had any original ideas for this project
There’re a lot of me too businesses which can live because they have relationships and customers.
probably thought of earning millions
You, as a person asked to participate as founder, should be informed about possible strategy and customer type / existing-prospect customer names. Ask your relative about it. Does the answer satisfy you - even from common sense perspective?
The guys they hired had 10 year old coding style
While technology may matter, the most important if customer is going to pay for the product. If it will - why not having them using IE or Windows 98? Do not be obsessed with perfectionism - you should implement what is required within budget, customer need and having advantage (commercial or technical) relative to competition.
passwords were not encrypted
Several things here:
If I would be considering such service for business purposes I would not choose one which does not provide encryption and does not comply some basic security rules.
what kind of legal troubles I might face just by partnering in company registration
I think there should be at least 3 types of companies available for registration, and they may have different level of responsibility for owners/investors. Ask your relative which company type he has in mind, and check your country’s regulations or ask more precise question on this matter.
he has no respect for copyrights when using images etc on front end
Many images are free to use on specific licensing terms. Not everything is so copyrighted that makes available images useless for you/business.
I am not sure what kind of contract it will be
Being investor and employee are absolutely different things. If you work for contract or as employee you can be fired and your IP (intellectual property), most probably, will remain with company.
I am not sure what will be the best way to say it to him.
Ask him tough questions - it is a must for you. History teaches that when money come into play, no friendship or even relationship matters. If you can not agree on some key points at the beginning, or another party tries to hide something, most probably it will perpetuate into the future.
Be ready and able to say NO.
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