A free founders agreement template handles the basics: names, equity split, who does what. It rarely covers what happens when one of you wants out, who owns work done before you incorporated, or what breaks a tie when you disagree. Add those three before you treat a template as done.
What does a founders agreement template usually get right?
The basics that most teams actually need on day one. Expect a working template to cover the company's name and structure, each founder's legal name and role, the headline equity split, and a short description of the business. That much is standard across free templates, and it is enough to write down what you already agree on so you cannot "remember" it differently later.
A plain founders agreement is fine for this stage, before you have raised anything or hired anyone, according to one founder guide to the gap between a founders agreement and a shareholders agreement. The problem starts once the stakes rise past that point.
What do free templates usually miss?
The clauses that only matter when something goes wrong, which is exactly when you need them written down already. Legal guidance on founders agreements repeatedly flags the same gaps:
- Buy-sell provisions. Without one, a departing founder is free to sell their shares to a competitor, as one startup law guide puts it plainly.
- Dissolution and exit terms. Clauses that spell out what an orderly exit looks like, so the first real departure is not the first time anyone thought about it.
- IP assignment for early work. Code or designs from before incorporation can stay with whoever made them unless the agreement claims it for the company.
- A tie-break. A rule for who decides when the two of you are stuck 50/50, agreed while you are both still reasonable about it.
Missing any of these does not void the agreement outright, but it creates a gap that shows up at the worst time: during a disagreement, a departure, or due diligence ahead of a raise.
Who should decide what, and how
A template cannot write this part for you, because your split depends on your roles, not on a form. Write down who makes the final call in each area, and what happens if you cannot agree. Our cofounder decision-making guide walks through a workable split by area; the cofounder agreement checklist lists every term worth deciding on before you sign anything.
| Clause | What a free template gives you | What to add |
|---|---|---|
| Equity split | A headline percentage | Vesting schedule and a cliff |
| Roles | A short title each | Who has final say in that area |
| Departure | Rarely mentioned | Buy-sell terms and good leaver/bad leaver treatment |
| Tie-break | Rarely mentioned | A named decider or outside advisor |
Why a template is a draft, not a finished document
Because a lawyer reviewing a template catches two things a form cannot: whether your vesting and buy-back terms actually bind the company, and whether a clause quietly conflicts with your Articles of Association. Vesting written only into a side letter is weaker than the same terms sitting in the company's constitutional documents. That is a one-time fix worth the cost before you raise.
Once the structure is in place, the harder part is making sure both of you actually read it the same way. A free cofounder alignment check shows where your answers on roles, equity and decisions already match, and where they quietly differ, before you put either one into a document and sign it.
Frequently asked questions
- Is a free founders agreement template enough for a new startup?
- It is enough to lock in intent on day one, not enough to raise money or hire on. Free templates cover equity splits and basic roles well. They are thin on exit mechanics, vesting enforcement and tie-breaks, the clauses that matter once real money or a real disagreement shows up.
- What do founders agreement templates usually leave out?
- Buy-sell provisions that stop a departing founder selling shares to a competitor, dissolution terms for an orderly exit, and a tie-break for when the two of you deadlock. Most templates also skip IP assignment for work done before incorporation, which quietly stays with whoever wrote it.
- Do I still need a lawyer if I use a template?
- Yes, before you raise or hire. A template is a starting draft, not a finished agreement. A startup lawyer checks that your vesting and buy-back terms are actually binding, usually by making sure they sit in your Articles of Association and not only in a side letter nobody else signed.
- What is the difference between a founders agreement and a shareholders agreement?
- A founders agreement is the two of you working out roles, equity and what happens if someone leaves. A shareholders agreement is the formal, company-level document that binds everyone with shares, including future investors. Start with the founders agreement, then have a lawyer convert the parts that matter into the shareholders agreement.