Founders Term Sheet

A Founders Term Sheet (also known as a Founders Agreement) is a contract setting out the key points of agreement between co-founders of a business. It governs important matters such as ownership of the business, how decisions are made, what happens when a co-founder wants to leave the business and how disputes are handled. Read more here.

No, term sheets aren’t actually legally binding. However, they are commonly used in startups and small businesses in their early stages to set out the key terms and foundations of your business moving forward. This way, the founders can develop a strong understanding of their business’ goals and how they can achieve them, which makes a great blueprint for official and legally binding contracts later down the track.

However, parties can make term sheets legally binding if they expressly agree to do so.

There are various key terms that should be covered in a Founders Term Sheet, so it’s wise to work through these matters with a lawyer. This way, you can ensure your term sheet is suited to your business’ requirements.

The following are some common matters to include in a Founders Term Sheet:

• What the founders’ responsibilities are
• How the founders will be paid
• How many hours each founder is expected to contribute
• What will happen to the business if a founder wants to leave
• How decisions will be made
• How the equity of the business will be divided
• Ownership of intellectual property

Our Founders Term Sheet package starts at $600 + GST. This includes drafting the document, a complimentary round of changes and phone calls with a Sprintlaw corporate lawyer to discuss the terms you’d like to include and help answer your questions.