Auto Repair Shop Partnership Agreement

Your agreement must include an attached inventory list specifying which tools and lifts are personal property and which are joint business assets. It should clearly outline whether the shop is leasing this equipment from the individual partner or if it has been fully transferred to company ownership. This prevents bitter ownership disputes over expensive gear if the partnership dissolves.

You should establish a clear distinction between partner draws and hourly or salaried compensation for actual shop labor. If one partner performs the majority of the hands-on mechanical work while the other handles administration, the working partner must be paid a fair market wage for their labor before remaining profits are split. This structure keeps compensation fair and prevents resentment over unequal work schedules.

The partnership agreement should specify a pre-approved valuation method, such as a multiple of annual shop revenue or an independent appraisal of physical assets and customer goodwill. It must also include a right of first refusal, giving the remaining partner the first opportunity to buy out the departing partner's share before it can be offered to an outside buyer. This ensures the business stays in trusted hands without interrupting daily garage operations.

A general template lacks the industry-specific clauses needed for auto repair, such as environmental liability for hazardous waste disposal and garage keepers' insurance requirements. Your agreement needs custom terms that address the high-liability nature of automotive work and the shared responsibility for safety compliance in the bays. Using a generic document leaves your personal assets vulnerable to industry-specific legal and regulatory risks.