For 23 years, Kathleen King worked hard, creating recipes for her growing bakery in Southampton, NY. To help with some of her overwhelming duties and the business end of things, King decided to take on two brothers as her partners. She agreed to split the company evenly amongst the three of them.
Six months later, the two brothers teamed up to get ownership of Kathleen's Bakery. In January 2000 she went to work and was confronted by her partners blocking the door and holding paperwork that would evict her from her own bakery. When she returned the following day, security guards with guns had been hired by her partners.
"They wanted to portray a picture of me to the community that they needed this because I was crazy," she told Inc. "I didn't do what they wanted me to, which was to just walk away."
She filed a lawsuit against the brothers, but was granted nothing more than the building the bakery was housed in. After eight months of fighting the outcome in court, King was left with $200,000 in debt. The settlement gave her former partners the rights to keep the bakery's name and recipes.
"They were allowed to use my recipes, but never once did they duplicate them in the quality and consistency that I did, so I felt in the big picture they really didn't have my recipes," says King. "They weren't interested in quality control—they were interested in the bottom line."
And she was right. In just a few months, Kathleen's Bakery had accumulated $600,000 in debt, and eventually had to shut down.
"I never saw something so valuable get destroyed so fast," says King. "And as they were driving everything into debt, it was still my name on the business."
Building a New Business
To get out of her own debt, King re-financed the retail location she had won back in court to start a new bakery called Tate's Bake Shop.
"Losing the name 'Kathleen's' was hard, but in the end I am grateful because I prefer the name Tate's," says King. "I appreciate being the person behind the name and not the name. This allows me to have less emotional attachment, which is a positive business attribute."
Currently, Tate's chocolate chip cookies are regarded as the number one cookie in America by Consumer Reports. They produce about one million cookies per week and distribute to 42 states. According to Inc., her company profited $6 million in 2009.
Considering how far Tate's has come, King has little regrets about the past.
"It was the most challenging time of my life, but if that's what I needed to go through to get where I am today, then I would go through it again. I was naive, but I learned from my mistakes and now, I know so much more about the business end and have made more secure decisions."
King's Final Advice
King warns business owners to think before bringing on partners. "I would advise people before going into a deal with anyone, to make sure they have a good lawyer and listen carefully to the advice that you are paying for," she says. "Don't think you know the person, because people can change after signing—be protected on all ends. Try to maintain control and hire professionals in your weak areas as opposed to taking on partners. Having a partner can make you feel safe in the beginning, but in the end it can be your biggest challenge."
King tells us she won't ever take on another business partner, even with legal protection. Instead, she hired a business manager for her current bakery to take care of things on the financial end so that she can focus on doing what she does best.
"The business manager was excellent in finance. He showed me how we could go from A to B to C and with that kind of help and support, it happened."
King hasn't spoken to her former business partners since they forced her out of her bakery. When asked what King would say if she could speak to them, she took a long pause before answering.
"You know, I don't wish harm on anyone," she said. "That being said, I have nothing to say to them; I think my success speaks for itself."