We’ve written about issues on Roblox before, including contractor agreements and  intellectual property and privacy issues and other legal issues to consider. But today we’re going to talk about when developers work with other developers who are (or aren’t) going to own part of a game and why developers should consider formalizing those relationships early, whether in some sort of legal structure or as independent contractors.

Consider what might be a familiar scenario: a few Roblox devs who are friends make a game or games together. One of them makes all the art assets and the user interface, another does most of the gameplay code, and the third helps with a little of everything. The three friends have an informal agreement about sharing the Robux derived from the game(s) equally, split three ways. At some point, one of them wants to work on solo projects. What happens to the game(s) they worked on together? What happens to the revenue share? What if they bring in someone new to replace the friend who’s leaving and want to give that person revenue share?

Business relationships can end in a lot of ways: someone leaves the group, the group gets acquired, or there’s some other sort of “exit.” Many video game developers don’t think about the end from the beginning, but we’ve seen this be especially true on Roblox where relationships aren’t formalized in a written agreement, let alone in a company or other formal structure. No one wants to think about what might go wrong or how things might end, especially when  starting off in a new venture. But as many developers eventually learn, failing to plan for those scenarios can be far more painful—and expensive—than having a few uncomfortable conversations at the start.

Below are three major issues Roblox developers should address early, even (and especially) when working with friends.

1. What Happens If Someone Leaves?

When there’s no written agreement and no formal entity, the default legal rules may apply: copyright vests automatically when someone creates something, and absent a written agreement to the contrary, everyone who worked on the game has a stake in it of some sort. That means developers who leave (1) still get a share of the game’s revenue because their assets are used in it, and (2) may owe everyone else royalties if they use those same assets in other projects. Given that, developers may want to think about determining what happens to revenue share in a game and to the underlying assets before someone leaves. Here are a few questions to think about:

If the developers have been splitting Robux (or other revenue) and one person leaves, does that person continue receiving revenue forever or is there a buyout option or something else?

Who owns the underlying assets for the game and what can be done with those assets apart from the game?

On the flip side, developers should also think about what might happen if they want someone to leave, as in an instance of bad behavior, poor performance, or worse. Figuring that out now can only save headache later.

2. What Happens If There’s a Disagreement?

Disputes are common, even among friends. Growth, money, stress, and creative direction all change dynamics. If there are two developers at 50/50 ownership (actual or implied) or an even number of developers who split evenly on a decision, how will the developers resolve that deadlock? That question becomes especially important when it comes to critical questions like selling the game or taking on investment or what to do with all the revenue the game is hopefully bringing in.

Without a governing agreement, there may be no tie-breaking mechanism. A developer could end up frozen—unable to move forward—or in costly litigation.

3. What If Something Goes Wrong?

Cease and desist letters arrive all the time, especially for issues around copyright infringement for music or for using third-party intellectual property as the basis of a game, as with many anime games on Roblox, or for trademark or other issues. If developers in those circumstances haven’t formed a legal entity, they could be operating as a general partnership by default with each of the developers personally liable for any legal damages (meaning that personal assets—like Robux and personal bank accounts could be exposed in a lawsuit).

Forming an entity can separate personal and business liability (as long as corporate formalities are maintained) and can often provide other benefits for accounting and tax purposes.

Conclusion

Many Roblox teams begin without forming an LLC or corporation. That’s common—but it has consequences.

Without an entity:

• There may be no clarity about what happens when someone quits (or when the developers need someone to leave).
• Developers may hit deadlock situations more easily when facing tough decisions.
• Developers may unintentionally form a general partnership.
• Each developer may have authority to bind the others.
• Each developer may share personal liability for the Roblox game.
• There may be no clear mechanism for adjusting ownership (or even just revenue shares).

There’s a saying in medicine that an ounce of prevention is worth a pound of cure. The same is true in law. The most expensive time to hire a lawyer is after a dispute has already started. Even a simple written agreement is likely better than nothing. But more often that not, developers may want someone to look over their agreements to make sure those agreements will function the way the developers want and that the agreements will be legally binding.