On Taking Out Insurance
Normally, the company itself takes out the insurance policies, not the partners. When someone dies, the company gets the proceeds and buys back the shares. If partners take out personal insurance, there are some tax complications--and weird motivation, if one wanted to kill the other. --The Finance Guy on each other, so that if one died, the insurance payment would fund the survivor's share purchase. They also included what's known as a shotgun clause. The idea is that, if things go south between partners, the shotgun clause provides a fair price for one partner to buy out the other and a lawsuit-free way for the business to survive. For Daguin and Faison, this would become key.
By 1999, D'Artagnan was on track to produce $20 million in annual revenue, and it was still growing fast--suppliers were now approaching them, which meant new products and new customers. Then, at Christmas, the highest sales week of the year, some consumers reported they'd gotten sick from D'Artagnan products. A Centers for Disease Control and Prevention investigation found several D'Artagnan items from a single factory tested positive for listeria,
For liability issues, when selling a product it's essential to have a legal entity such as a corporation or an LLC. A partnership--i.e., no legal entity--is worthless for protecting either partner's assets. --The Finance Guy a dangerous bacteria. Together, Faison and Daguin responded immediately. They voluntarily recalled all 70,000 pounds of very expensive meat that the factory had processed. Daguin put her name and phone number on press releases for consumers and journalists, and organized calls to all 3,576 people that had bought the products directly from D'Artagnan. On the operations side, Faison fired the plant that had produced the tainted meat, hired a new factory, and required daily and third-party sanitation monitoring. "They handled it very well," says Saul Zabar, who sells D'Artagnan products from his Manhattan retail store, Zabar's. Even a CDC epidemiologist noted that the owners response was "aggressive." But many retailers were angry, and even if they weren't, they needed someone to supply products, and it was five months before D'Artagnan was selling those products again. For the first time, the company lost money--a lot of it.
Hoping to rebuild the company's reputation, Daguin decided that opening a restaurant in New York City, a longtime dream, would help. The company tended to get good press only when it launched new products, she told Faison, which shifted too much attention to product development. Opening a new restaurant would address that issue and also further establish D'Artagnan's brand among consumers. It would have to be modest so it wouldn't compete with the company's restaurant clients, but it would sizzle with Gascon flavors. Especially when Daguin was able to line up outside investors, Faison thought it was an excellent notion. As did reviewers--The New York Times awarded D'Artagnan The Rotisserie two stars in July 2001, saying it "has so much personality, it can sell it by the pound."
But seven weeks later, it was September 11. New York's economy plummeted. And a year and a half after that, France opposed the Iraq war and French restaurants were spurned. While Faison spent his days in Newark, where D'Artagnan is headquartered, Daguin was now at the restaurant most afternoons and evenings. They both had to invest more money than they'd expected, and they began to argue about the venture. Faison believed Daguin had pitched it as a side project, and now he found himself going on sales calls for the main business in her place, since she was off at the restaurant all day. "She asked me for help
Theoretically they had a shared vision at the start, but if somebody's going to change the rules on you, it's a good idea to talk about it. They might have decided that she would start a different company to have her restaurant. --The Mediator with running the restaurant, and I told her, absolutely not, I had a job," Faison says. Daguin, for her part, thought that while he'd supported the restaurant initially, he was now showing up for a meal there twice a year. "We were in this together,"
On Determining Roles
I'm not clear that he was actually happy with the idea in the beginning. It doesn't look as though they had an agreement as to what Faison's role would be and what Daguin's role would be. Daguin says they were in this together--but was it her perception or was that reality? --The Marriage Coach she says now. "Why wasn't he in there more?" At the same time, she also figured, she loved running the restaurant, and "in some ways, if he had been there, maybe we would have fought about things unnecessarily." But the business never came back, and they agreed to close the restaurant in the beginning of 2004.
By that time, though, Faison had come to believe that D'Artagnan's problems extended beyond the restaurant. Daguin's salespeople were getting commissions based largely on sales, which were high, but his operations people were getting bonuses based on profitability, which was low. He also felt the company should focus on more profitable prepared products and restructure the restaurant-distribution business by instituting a minimum order size and cutting the number of routes. Daguin disagreed.
