I have a question regarding invest money in one of the franchise and pay the share upfront.
We are 4 partners, and planning to get the franchise of one of the famous food chain, and we register company and apply for the loan to be allocated to our company to start business. Now, as we all are equal partners, and one of us would like to pay his share right away in cash and rest of 3 partners are going to apply for loan, My question is the partner who paid his share already in cash, the loan will be issue on the company name and he is the partner (equally share ) in the company. For him the contract will be the permissible or he will also held accountable for having loan on interest. ( hope i explains the situation properly and you are able to understand actual point). JazakaAllah khair
Bismillahi Ta’ala
Walaikum Assalam Warahmatullah
Mufti Ebrahim Desai was asked about entering into a partnership wherein the partner has taken out an interest bearing loan. He replied that,
It is not recommended that you venture into a partnership with such a person. It is advisable that you encourage the brother that he terminate his interest bearing loan by borrowing money on a non-interest basis and paying off the interest bearing loan.
If he cannot be convinced, then it would be necessary for you that you terminate your partnership as it is feared that you may be involved in this wealth eating Haram interest.
Taking out an interest bearing loan is explicitly haram. There is no question about it.
Moreover, while the partner will be bringing in their own money (from an interest bearing loan), every partner will become a wakeel on his partner’s behalf in a Musharakah. And since the loan is on the business name too, all while you are a part of the business, you will also become a partner at a level in his interest bearing transaction with the bank.
In doing so the income from such a venture will be haram, and you will be directly involved in its assistance. Thus, you will be accountable for the loan on interest that is on the business name.
Even if this was not in your knowledge at the time of joining into the partnership, upon finding out you are shar’an liable to oppose such an activity of the partnership, and exit that partnership if the partners do not desist from the haram activity.
As a side note, also read our answer about owning and running a franchise that sells haram/questionable foods. That answer will also apply to your partnership as well. [ https://qna.ilmhub.com/question/is-doing-mm-franchise-business-frozen-food-halal-or-haram-in-canada/ ]
Wallahu A’lam
And Allah Ta’āla Knows Best
Mufti Faisal al-Mahmudi