Corporate & Transactional
A hospitality business’s legal foundation — entity selection, operating agreements, governance structure, and buy-sell provisions — determines how the business runs, how disputes get resolved, and whether it is attractive to investors or acquirers years later. I counsel hospitality founders, operators, and investors on business formation and governance from the single-unit LLC through complex multi-entity group structures.
- LLC, S-corp, C-corp, and partnership formation for restaurant and hotel businesses
- NYC Unincorporated Business Tax planning and multi-entity structuring
- Operating agreement drafting and negotiation
- Governance, voting rights, and management authority design
- Capital accounts, distribution waterfalls, and preferred return provisions
- Buy-sell agreement drafting and valuation methodology design
- Deadlock resolution mechanisms
- Non-compete, non-solicitation, and confidentiality provisions
What is the best business entity for a New York restaurant?
A single-member or multi-member LLC is the most common and often most appropriate entity for a New York restaurant — but the right structure depends on the ownership composition, tax objectives, investor relationships, and growth plans of the specific business.
The LLC offers pass-through taxation, personal liability protection (with important wage and hour limitations), and operational flexibility. An S-corporation can offer payroll tax savings for owner-operators who pay themselves a salary, but it imposes ownership restrictions that make it unsuitable for deals involving outside investors. A C-corporation is often right for businesses planning to raise institutional capital or PE investment, since preferred stock structures require it. The choice should be made with both legal and tax advisors — it has long-term consequences that are expensive to unwind.
What should a restaurant operating agreement include?
A restaurant LLC operating agreement is the most important governance document the business will ever sign — because it determines how the business is controlled, how profits flow, and what happens when the relationship between owners breaks down. At minimum it must address: management structure and authority; capital contributions and what happens when more is needed; profit and loss allocation; distributions — when, how, and whether any member has a priority return; compensation to the operating member separate from ownership return; transfer restrictions; buy-sell provisions covering death, disability, divorce, bankruptcy, and voluntary exit; and deadlock resolution.
Operating agreements drafted from generic online templates routinely omit the provisions that matter most — particularly buy-sell and deadlock provisions — because those require anticipating conflict, which parties resist at formation. The absence of those provisions is what causes the most expensive business divorces.
What is a buy-sell agreement, and does my restaurant need one?
A buy-sell agreement governs what happens to an ownership interest when an owner exits — voluntarily or involuntarily. It answers the questions that destroy partnerships when left unanswered: How is the business valued when a partner wants out? Can the departing partner sell to anyone? What happens if a partner dies? If a partner’s spouse claims an ownership interest in a divorce? If a partner files for bankruptcy?
Every restaurant with more than one owner needs one. Without it, a partner who is locked out has no defined remedy for exiting on fair terms; a deceased partner’s interest passes to a family member with no role in the business other than extracting value; a divorcing partner’s spouse clouds title. All of these are more expensive to resolve in litigation than to prevent with a well-drafted agreement.