RMI Framework

The Return Management and Investment Framework is a model I came up with in December 2012 for collaborators to get returns on their investment of time into a project and a share in the profits.

Let’s suppose its A’s Brainchild, B is bankrolling it and C is spending his time developing the system.
Since each is going to spend time bringing the project to fruition, they must first all come up with an hourly rate, a remuneration fraction and an expenses fraction. Also, percentages of the profit for each person are to be decided.

If the project fails to show profitability after X months, B has to pay A and C for their time (remuneration fraction * hourly rate * time spent) and expenses (expenses fraction * money spent).

Guidelines:
The higher a person’s fraction is (the less risk he is taking), the less needs to be his share of the profit.
The person who developed the idea may show that as an expense or convert the value into time spent (appropriate fraction will apply).
An optional premium factor (bonus rate) can be described which is the extra remuneration a person gets if there is ample profit.
A may want more of the profit because it was his idea.
B may want more of the profit because he is taking the financial risk.
C may want more of the profit because his fractions are lower (less risk to the other parties)

Scenarios:
If C is replaced by D, his [profit] share can be split with D based on the ratio of their hours put in. He should retain a percentage of the profits for being an early contributor or his stake be bought out.
D can be treated as a simple consultant with no fraction (risk) and be paid on completion of his work (expense to B).
If C was unable to continue, he may be asked to pitch in towards D’s payment or a penalty (% of D’s charge) be taken from his share of the profit.
C is charged an amount by A for being allowed to publish the source code / take ownership for it / make it open source.


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