Congratulations on your acceptance into Union Kitchen’s Accelerator! We’re excited to work with you to build your successful food business.
To begin our partnership, we execute three documents: the Operating Agreement, the Unit Purchase Agreement, and the Non-Compete & Non-Disclosure Agreement. The Operating Agreement, Unit Purchase Agreement, and Non Disclosure Agreement outline the expectations and terms of our partnership. This ensures that everyone has a clear expectation of our partnership as we work together to build your business. Through the execution of these documents, we will have clearly defined roles and responsibilities to set the partnership up for success from day one!
Operating Agreements
The Operating Agreement defines how a company will conduct business. Operating agreements explain things like the name and purpose of the company, how often board meetings will be held, your responsibilities as an owner or officer of the company, and our responsibilities as an investor.
Among other things, the Operating Agreement establishes your company’s board of directors. The board is the governing body for your business and support system! Board members meet regularly to set governance, provide oversight, and offer strategic guidance.
The board moves forward on decisions with a majority vote. As CEO and Founder, you will be the chair of the board and will have the authority to call board meetings and have the opportunity to elect a third board member, like a co-owner or another business advisor, to maintain majority control of the board.
The board reviews and votes on large scale decisions, like setting the annual budget. As the business owner, you will have autonomy over the day to day decisions of running your business. As an early stage investor and business partner, Union Kitchen will have a board seat to support your business decisions and share insight based on previous experience to help your business navigate decisions that could pose an existential threat if you get them wrong. Union Kitchen does not benefit from voting against the business owner’s priorities. Our role is to support the growth of your business and your goals and our partnership only results in success if your business is first successful!
The operating agreement also outlines protective provisions for Union Kitchen as the minority shareholder. Because we are coming in at an early stage, traditionally the riskiest time to invest, and putting our resources behind your business, we need to make sure our investment is protected. The documents reflect this through our protective provisions and involvement on the board. The earlier the investment, the riskier it always is because there isn’t sales data and market proof yet. Union Kitchen conducts careful consideration when selecting entrepreneurs to work with through our Accelerator and because of this, we see high potential in achieving national success with brands like yours. We want to provide the roadmap, ecosystem, and expertise to help you get there!
Non-Compete/Non Disclosure Agreements
This is between you as an individual and your company. This document defines confidential material, knowledge, and information that belong to your business. Each business owner will sign their own agreement. The purpose of this document is to protect your company’s ideas and information from an individual utilizing the resources from your company to build a similar business.
Unit Purchase Agreement (UPA)
The Unit Purchase Agreement is the mechanism by which Union Kitchen is able to buy units in your company to become equity partners. Equity represents the percentage value that would be returned to a company’s shareholder if they are bought out or the company is acquired. The equity exchange between your company and Union Kitchen is not related to your company’s profits or units of product, but rather the value of your company. We take our work and yours very seriously. In exchange for our equity share, we pour our resources, network, Ecosystem, and expertise into this partnership to support your success.
The Unit Purchase Agreement also outlines the parameters around the unit price, or how much each unit costs. Upon execution of the agreement, the valuation of your company is set at $1M. As your company grows and becomes more successful, the company valuation will increase. Future valuations can support fundraising efforts and buy-outs, among other things. If the company is interested in buying out an investor, like Union Kitchen, the company can present a buy-out offer to the board for a vote. The valuation would be determined at that time, typically by a third party. The Unit Purchase Agreement provides the opportunity for Union Kitchen to invest in subsequent investment rounds, however, Union Kitchen has no intention of becoming a majority shareholder so Union Kitchen would not buy a company owner out of their shares.
We are ready to embark on this long-term partnership with you! By understanding these three documents, we will align ourselves for a successful partnership. We want to see your business grow from where it is today to local, regional, and national markets. We are going to pour our resources, our team, and our ecosystem to support your success and help you build your business to last.