Question Summary:
A question regarding sleeping partnership

Question Detail:

I and a friend (another Muslim brother) in partnership are currentlyconducting business with a person. He can be regarded as the franchisor andus the franchisee. From the outset he (franchisor) was aware of the fact thatI will be the so-called sleeping partner in that I would not be running thebusiness but would be responsible for the administration (payments tosuppliers, banking, etc) thereof, so much so that when huge capital amountswere initially outlaid the 'franchisor' contacted me for these payments,etc. Prior to the opening of this business, when renovations, etc wereundertaken, my business partner was liaised with. After the commencement ofour business, unfortunately, my business partner, according to the'franchisor' is not competent to run this business. However, I have no doubtin my partner’s ability to successfully run this business. A meeting was heldbetween the three of us and the 'franchisor' rather rudely suggested that ifit means that I must run the business then so be it(I must run thebusiness). I explained to him that I am a sleeping partner meaning that myduties are the administration (payments to suppliers, banking, payments ofwages/ salaries, etc.) of this business. I mean each one of us two havedefined roles to play in this business. To the extent that I told the'franchisor' that for payments you must contact me but if you have acomplain as far as the successful running of the business is concerned,he('franchisor') needs to talk to my partner. But I have no problemhim ('franchisor') having a meeting with both of us(partners) to discuss hisunhappiness regarding any component of our business(running of it or theadmin part of it). Unfortunately he(franchisor) stopped liaising with me butnow liaises with my partner, to the extent that he tells my business partnerto convey to me what amounts are to be paid and to whom it must be paid andby when it must be paid. I don't have a problem with him liaising with mypartner for my partners role in the business (as explained above – therunning of the business, ordering of stock, stock levels) but I don't thinkit is correct for him to convey messages to me via my partner for my role inthe business. I find this very, very unfair. I humbly request Mufti Saheb toclarify as to what is correct and to advice. Furthermore, I humbly requestMufti Saheb to make Dua'a for me and my success.
 

Answer :

In the Name of Allah, the Most Gracious, the Most Merciful.
 
As-salāmu ‘alaykumwa-rahmatullāhiwa-barakātuh.
 
A sleeping partner in a Musharakah (joint venture) is he who merely makes a capital contribution and expects a profit on his capital contribution. He does not take part in any aspect of the business, whether it is the running of the business or merely doing finance administration. In your case, you are an active partner as you are tasked with administrating the finance. You are thus an active partner.You are not a sleeping partner.
The implication of being an active partner is he could take a profit percentage more than his percentage of capital contribution if that was mutually agreed upon. In the case of a sleeping partner, the profit percentage cannot exceed the percentage of the capital contribution.
If there was an arrangement that the franchisor was to communicate with you regarding payment and he does not keep to that, you should address this with your partner and advise him to direct the franchisor to you. Explain him you will be more comfortable if the franchisor communicates with you directly regarding your responsibilities.
 
( الْفَصْلُ الثَّالِثُ فِي شَرِكَةِ الْعَنَانِ ) تَنْعَقِدُ عَلَى الْوَكَالَةِ دُونَ الْكَفَالَةِ وَهِيَ أَنْ يَشْتَرِكَ اثْنَانِ فِي نَوْعٍ بُرًّا أَوْ طَعَامًا ، أَوْ يَشْتَرِكَا فِي عُمُومِ التِّجَارَاتِ وَلَا يَذْكُرُ الْكَفَالَةَ وَيَصِحُّ التَّفَاضُلُ فِي الْمَالِ لِلْحَاجَةِ ، وَيَصِحُّ أَنْ يَتَسَاوَيَا فِي الْمَالِ وَيَتَفَاضَلَا فِي الرِّبْحِ ، وَيَجُوزُ أَنْ يَعْقِدَهَا كُلُّ وَاحِدٍ مِنْهُمَا بِبَعْضِ مَالِهِ دُونَ الْبَعْضِ ، وَلَا تَصِحُّ إلَّا بِمَا تَصِحُّ بِهِ الْمُفَاوَضَةُ ، وَمَا اشْتَرَاهُ أَحَدُهُمَا لِلشَّرِكَةِ طُولِبَ بِثَمَنِهِ دُونَ الْآخَرِ ثُمَّ يَرْجِعُ عَلَى شَرِيكِهِ بِحِصَّتِهِ إنْ أَدَّى مِنْ مَالِ نَفْسِهِ ، فَإِنْ كَانَ لَا يُعْرَفُ ذَلِكَ إلَّا بِقَوْلِهِ فَعَلَيْهِ الْحُجَّةُ وَإِذَا هَلَكَ مَالُ الشَّرِكَةِ ، أَوْ أَحَدُ الْمَالَيْنِ قَبْلَ أَنْ يَشْتَرِيَا شَيْئًا بَطَلَتْ الشَّرِكَةُ وَأَيُّهُمَا هَلَكَ هَلَكَ مِنْ مَالِ صَاحِبِهِ إنْ هَلَكَ فِي يَدِ صَاحِبِهِ فَظَاهِرٌ ، وَكَذَلِكَ إنْ كَانَ فِي يَدِ الْآخَرِ ؛ لِأَنَّهُ أَمَانَةٌ فِي يَدِهِ بِخِلَافِ مَا بَعْدَ الْخَلْطِ حَيْثُ يَهْلِكُ عَلَى الشَّرِكَةِ
مجمع الضمانات – ج 2 – ص 639 – دار السلام
 
And Allah Ta’āla Knows Best
Mufti Hussein Issa,
Mozambique
Checked and Approved by,
Mufti Ebrahim Desai.
www.daruliftaa.net