D’Artagnan CASE 15 The Troubled Partnership of Ariane Daguin and George Faison A riane Daguin was a 20-year-old student clanking delivery truck around town. That was when from a family of Gascon chefs when she they worked in the same office and propped each met George Faison, a Texan with a taste for other up and argued each other down. It was going French food. It was 1979, and they were students at to be forever-but there are no guarantees with Columbia University. They sealed their friendship partnerships, many of which fail to stand the test over rowdy outings to New York City bistros, where of time. (For the sake of discussion here, the term they and their friends would pool funds to split a partners refers to co-owners of a business, whether bottle of good wine. That is how their story begins. it’s a legal partnership, a limited liability company, When Daguin joined a charcuterie company, or a corporation-in any case, they are people with she suggested that Faison, who had just completed roughly the same stake in the business.) his MBA, run the operations, which he agreed to do. In the early years of D’Artagnan, Faison and In 1985, a New York farm announced it would start Daguin, underpaid and subsisting on sample prod- raising ducks for foie gras. Although foie gras, ucts, took a tag-team approach. When one was fattened goose or duck liver-had never been pro- begging farms to produce free-range poultry, the duced in or imported fresh to the United States, other was frantically sorting 12 young chickens for Daguin had grown up on the stuff in Gascony, and this hotel and 16 rabbits for that restaurant and she and Faison believed Americans would devour jumping in the truck to make deliveries at dawn. it. When the charcuterie owners disagreed, Daguin “There was not one day when one of us did not tell and Faison decided to start their own foie gras dis the other, ‘I’m quitting, and the other one would tributorship in New Jersey. They were in their 20s say, “One more day, okay? Just show up tomorrow and full of energy, and they named it D’Artagnan, morning,’ says Daguin. “[Still, it was an incred- after Alexandre Dumas’s musketeer-all for one ibly good feeling. We felt part of a group of people and one for all. who were changing the food world.” And as chefs Daguin and Faison began the business by distrib- learned about the new products D’Artagnan could uting foie gras and other local farm-raised delicacies provide, it almost seemed that business was dou- to chefs. Soon they were selling prepared products bling on a daily basis. As a chef at one exclusive to retailers, too. Their partnership was strong: She New York restaurant pointed out, “Now we take knew the food and could talk chefspeak (her father them for granted, but (D’Artagnan] was one of the had a renowned restaurant in France), and he ran first to familiarize American consumers with these the business side. And their timing, it turned out, products at a very high level of quality.” was sublime. Young and influential chefs, trained Delivering that quality required crisis manage- in the latest techniques, were arriving in New York, ment on the back end. Suppliers were sprinkled all and they started signing on with D’Artagnan. over the country, products would expire if they were By 1986, the company had sales of $2 million. in transit too long, and chefs wanted extraordinary Those were the golden times, those honeymoon quality extraordinarily quickly. Faison and Daguin months of late nights and tough work and driving a were together so much that arguments erupted fre quently, but they had no choice but to solve them * Charterie refers to a branch of cooking that is devoted to prepared immediately. When resentment lingered, “we would meat products, including bacon, ham, sausage, terrines, galantines, pátes, and confit. go somewhere else and say, ‘Okay. When you did Source: Adapted from Stephanie Clifford, “Until Death, or Some this, I really didn’t agree. So I did this because I Other Sticky Problem, Do Us Part,” Inc. Magazine, Vol. 28, No. 11 (November 2006). pp. 104-111. Used with permission of br. Mage- was [angry],”” says Daguin. Perhaps because they’re sine Copyright 2014. All rights reserved. both straightforward and tough-and they’re evenly 481 NEL this, I really dian Source: Adapted from Stephanie Clifford, “Until Death, or Some Other Sticky Problem, Do Us Part, Inc. Magazine, Vol. 28, No. 11 (November 2006). pp. 104-111. Used with permission of Inc Mage zine Copyright 2014. All rights reserved. was [angryl,” says Daguin. Perhaps because they’re both straightforward and tough-and they’re evenly 48 NEL 482 Case 15 D’Artagnan matched physically at six feet tall-the head-on By 1999, D’Artagnan was continuing to grow, approach seemed to work. but a Centers for Disease Control and Prevention Their first big argument came after Daguin investigation found that several D’Artagnan items had a daughter in June of 1988. A single mother, from a single factory tested positive for listeria, a Daguin brought little Alix to the office to care dangerous bacteria. Together, Faison and Daguin for her, but tending to the baby’s needs dis- handled the problem aggressively and responsibly, tracted her from the work at hand. After a but many retailers were angry. And even if they couple of months, Faison, visibly upset, sat her weren’t, they needed someone to supply prod- down and said he felt she wasn’t pulling her ucts, and it was five months before D’Artagnan was weight and that he should draw more salary for selling those products again. For the first time, the a while. Though disturbed by Faison’s attitude, company lost money-a lot of it. Daguin realized that he had a point. She hadn’t Hoping to rebuild the company’s reputation, been working the way she had been before. She Daguin decided that opening a restaurant in New agreed to let him take more salary for the next York City (a longtime dream of hers) would help. six months. After that, her daughter could be The company tended to get good press only when placed in the care of a nanny. it launched new products, she told Faison, and Until 1993, Daguin and Faison were still run- this shifted too much attention to product devel- ning the business as informally as they had at the opment. Opening a new restaurant would address start. Though they had set up the company as a that issue and also further establish D’Artagnan’s corporation when they launched it, they hadn’t brand among consumers. When Daguin was able established clear roles, which meant they were to line up outside investors, Faison thought it was stepping on each other’s toes. Advisers suggested an excellent idea-as did reviewers. The New York dividing the business into two groups, which they Times awarded D’Artagnan the Rotisserie two stars did-Daguin took sales and marketing, and Faison in July 2001, saying it “has so much personality, it took finance and operations. For the first time, it can sell it by the pound.” was obvious who was responsible for what. But it But seven weeks later, it was September 11, also meant that the partners were now separated 2011. New York’s economy plummeted. And a physically and some employees were now dealing year and a half after that, France opposed the Iraq with only one of the partners. It also meant that war and French restaurants were spurned. While Daguin and Faison no longer communicated regu- Faison spent his days in Newark, where D’Artagnan larly, which allowed problems to fester. is headquartered, Daguin was now at the restau- Around the same time, D’Artagnan’s lawyer rant most afternoons and evenings. They both had wisely suggested the parties sign a buy-sell agree had to invest more money than they’d expected, ment. Buy-sell agreements dictate what happens to and they began argue about the venture. Faison a partner’s ownership shares if he or she leaves the believed Daguin had pitched it as a side project, business. In the form Daguin and Faison chose, if and now he found himself going on sales calls a partner died, the survivor would be offered his or for the main business in her place, since she was her shares at a determined price. “Initially,” Faison at the restaurant all day. “She asked me for help says, “the idea was to make sure that if one of us with running the restaurant, and I told her, abso- got hit by a truck, we wouldn’t have any succession lutely not, I had a job,” Faison says. Daguin, for her problems.” At the same time, Daguin and Faison part, thought that while he’d supported the res- took out life insurance on each other, so that if one taurant initially, Faison was now showing up for a died, the insurance payment would fund the sur- meal there twice a year. “We were in this together,” vivor’s share purchase. They also included what’s she says now. “Why wasn’t he in there more? At known as a shotgun clause. If things go south the same time, she loved running the restaurant, between partners, the shotgun clause provides a and in some ways, if he had been there, maybe fair price for one partner to buy out the other and we would have fought about things unnecessarily.” a lawsuit-free way for the business to survive. For But the business never came back, and they agreed Daguin and Faison, this would become key. to close the restaurant at the beginning of 2004. NEL Case 15 D’Artagnan 483 By that time, though, Faison had come to the money. There could be no negotiating. “It believe that D’Artagnan’s problems extended was-wow. I never saw this coming,” she says. “And beyond the restaurant. Disagreements started then it was all kinds of feelings: How dare he? How to erupt between Daguin and Faison over mat- could he do that?” But Faison believed Daguin had ters such as incentive systems for company stopped listening to him and was wrong about the employees, minimum order sizes, and the direction of the company. He felt he was at a dead number of delivery routes that should be run. end. In November 2004, a competitor offered to buy Daguin retreated to a friend’s beach house to D’Artagnan, but the partners rejected the offer, consider her options. She thought about taking the and Daguin assumed the talk of selling was over. money and opening a seaside restaurant. But when “After that, he didn’t talk about it anymore. her now 17-year-old daughter mentioned that she I should have smelled something, but I didn’t might like to join D’Artagnan someday, Daguin I really didn’t,” she says. decided, “All right. Let’s go fight.” She cold-called In reality, Faison was warming to the notion banks, which wanted a stake in the company, until of selling. “I did not tell her,” he says, “because I a friend helped arrange a loan at a French bank. It felt there was really no respect for the directions required higher interest payments and a personal we had previously discussed. At that point, it was guarantee, but it didn’t want shares of D’Artagnan. moot.” The problems he’d outlined-which he With that loan and personal savings, Daguin thought Daguin had pledged to fix-remained, matched Faison’s price. She presented her coun- and Faison was convinced that the business should terproposal to the surprised Faison, and the deal be more profitable. But, as one D’Artagnan execu- closed a month later. It was a very frosty finish to tive observed, “[That) wasn’t going to happen with their 26-year relationship, and the two have barely the two of them running the business at odds with spoken since the dissolution of their partnership each other.” “We talked with two voices before, and it’s not good The rift spread to the employees. When chefs for the company’s] well-being,” Daguin said. “Now rejected items, Faison’s truck drivers wouldn’t we’re going to talk with one voice.” alert Daguin’s salespeople about the issue. Or a And that is how their story ends. As for Faison, salesperson, deciding warehouse workers were dis he now has a nice cheque and is considering his regarding her specs, would pluck a rack of lamb next move; his noncompete expired in August from the shelves herself. Faison used to ask to sit in 2006. “I learned that my identity is not what I do on Daguin’s operations meetings, but she stopped for work,” he says, “and if I hadn’t had the oppor- going, finding his temper too unpredictable and tunity to reflect on that, I might never have gotten the meetings pointless. The company was split- that gift.” ting in two, and nothing was getting done,” she says. Employees could see the problems growing “There was a dividing line,” says Kris Kelleher, who, Questions as purchasing director, would sit in on meetings with Daguin and Faison and marvel at the consis- 1. How would you describe the entrepreneurial tently different directions they sought. “Sometimes team of Daguin and Faison? Was it ever a bal- I wondered why it was one company.” Something anced team? What did each member bring to had to give the business? Can you see gaps in their skills On June 16, 2005, Faison walked into Daguin’s and capabilities that should have been covered office and handed her a certified letter. She read in some way? it, then stared at him, flabbergasted. He was exer- 2. What does this case reveal about the critical cising the shotgun clause and offering to buy the factors that can determine the success or company for several million dollars. By the rules failure of a business that is led by more than a they’d agreed to, she had two choices: She had single entrepreneur? What was the beginning 30 days to sell her shares or buy his shares at the of the end” for Daguin and Faison’s working price he’d offered, with another 30 days to raise relationship? NEL 484 Case 15 D’Artagnan 3. What form of organization did Daguin and Faison choose for D’Artagnan? Assess the advantages and disadvantages of the major organizational forms mentioned in Chapter 10 and decide which one would have been the best choice for D’Artagnan. 4. Would a formal board of directors have made a difference in the relationship between Daguin and Faison and the operation of D’Artagnan? Draw up a profile of an ideal board for the company.
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