Contract templates · Business Setup & Ownership
Most co-founder disputes are not about the idea. They are about who owns what once one founder slows down, leaves or wants a bigger share. A founders' agreement settles that while everyone still gets along.
A founders' agreement is a contract between the people starting a company that records each founder's role, equity, vesting, IP contribution and what happens if someone leaves. Sign it before you incorporate or raise money, because investors will ask how founder equity vests.
When you need one
- Two or more people are starting a company together
- Before you incorporate or raise money
- When one founder contributes cash and another contributes time or IP
Key clauses in a Founders' Agreement
These are the clauses the template includes, and what each one does for you.
Roles and time commitment
Says who does what and how much time each founder commits, so 'part-time until funding' is written down rather than assumed.
Equity split and vesting schedule with cliff
Records the split and puts founder shares on a vesting schedule, typically four years with a one-year cliff, so equity is earned over time.
IP assignment to the company
Moves code, designs, domains and other work created before or for the company into the company, which investors check first in diligence.
Decision-making and deadlock
Sets which decisions need unanimity and how a 50/50 deadlock is broken, so the company does not freeze on a tie.
Founder departure (good and bad leaver)
Treats a founder who leaves on good terms differently from one dismissed for cause, usually by the price at which unvested or vested shares are bought back.
Confidentiality and non-solicitation
Keeps the company's information private and stops a departing founder hiring away staff or clients for a set period.
Dispute resolution
Sends disagreements to negotiation, then mediation or arbitration, before anyone goes to court.
Common mistakes to avoid
- Splitting equity equally by default without vesting, so a founder who leaves in month three keeps a full share.
- Leaving pre-company code or a domain in a founder's personal name, which surfaces as a problem in the first funding round.
- Having no deadlock mechanism in a two-founder company.
How to use the template
Download the Word file
Buy the Founders' Agreement template on My Contract Lawyer and download the editable .docx straight after checkout.
Fill in the brackets
Add names, dates, fees, scope and governing law, and delete optional clauses that do not apply to your deal.
Check it against local law
Rules differ between US states, the UK and EU countries, especially for employment, consumer and property contracts. Have a lawyer review high-value or unusual deals.
Sign and keep a copy
Sign on paper or with any e-signature tool, and store the final version where both sides can find it.
Get the Founders' Agreement template
Lawyer-drafted and ready to edit in Word, Google Docs or Pages. One-time payment of $29, no subscription, instant download from My Contract Lawyer.
Frequently asked questions
Do I still need a founders' agreement if we have a shareholders' agreement?
Often the shareholders' agreement absorbs it once you have outside investors. Before then, the founders' agreement does the job and is easier to agree because it is written for founders only.
What is a typical founder vesting schedule?
Four years with a one-year cliff is the common starting point in the US, UK and EU startup markets, with acceleration on a sale sometimes negotiated.
Can we sign it before the company exists?
Yes. Many founders sign it pre-incorporation and then have the company adopt it, with share issues and IP assignments completed once the entity is formed.
Related contract templates
Templates are a starting point, not legal advice, and using one does not create a lawyer-client relationship. Contract law differs between countries and states, so check the finished document against local law.