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Financing and FPRC:
- The company founders retain personal control of the business and
their economic destiny. Even companies that wish to engage in a Royalty Limited
Partnership (RLP) structure that has existing stockholders, can easily convert
stockholders to Limited Partners in the RLP. Its not even debatable that if given
the choice, a stockholder would rather have a monthly Royalty Limited Partnership income
check, based on volume of gross sales, versus a quarterly stock report, with double
taxation on any possible dividends. Therefore; one of the first things addressed by
consultants, will be a conversion to recapture control and ownership to the founding
father or fathers of the company.
The principals are not
personally liable as with conventional debt. What is this feature worth in todays
As the Operating General
Partner (OGP) of the RLP, the principals have absolute control without personal
liability.The only liability incurred as the OGP, is that of fraud. The RLP, by virtue of
design, discourages any form of fraud or misrepresentation, because if it hurts the
investors, it equally hurts the OGP. The investor and the OGP are remunerated in exactly
the same way.
Funding under a RLP is
100%. This obviously eliminates the problems faced by CEOs that spend 90% of their time
juggling funds from one account to another to satisfy a diversified debt portfolio. This
increases the amount of time the CEO may spend on expanding his companies volume of sales.
A RLP is inexpensive. If
you actually run a financial computer profile of what your company would look like in 10
years with a conventional loan, versus what it would look like after initiating a RLP, you
will find that there is no comparison. The RLP will deliver in most cases as much as
300-500 per cent more profit over the same time period. This question is moot in most
cases, however; because most companies cannot borrow what they need in the first place.
The RLP is a business
tool that releases the bonds of credit worthiness, so, corporate and personal financial
growth no longer depends on your net worth. The use of the RLP as a business tool, one
after another, will allow the entrepreneur to accomplish 10 or more times in a lifetime,
what he may do though debt or equity financing.
Cyclical risks are all
but eliminated. Sharp down turns in the market can be easily survived with an RLP because
the cost of doing business is tied directly to sales. If you dont sell anything, you
dont owe anything. This can add years onto the physical life of a CEO. CEOs
who have an extensive business background, know exactly how important this is to their
mental and physical health. In the case of cost comparison, what exactly is this worth?
These are not perks!
Use Agreement payments
are 100 % tax deductible to the company as a cost of doing business.
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