The Profit

Blood feuds: When the family business goes horribly wrong

Blood feuds: When the family business goes bad

Steve Cady | E+ | Getty Images

"Happy families are all alike; every unhappy family is unhappy in its own way." —Leo Tolstoy, "Anna Karenina"

Many of the most famous and successful businesses in the U.S. are family-owned. Wal-Mart, Ford Motor and News Corp. are about as big as they come, and despite recessions, fluctuating consumer tastes and bursting bubbles, these companies have always kept it in the family.

When things go well, working with family can be extremely rewarding. Selena S. Cuffe is president and CEO of Heritage Link Brands, a company she co-founded with her husband that transforms African products into global brands. She conceded that toiling alongside family brings challenges but had mostly positive things to say.

"You trust the people you're working with," Cuffe said in an email. "Everyone is more invested than if they were at just 'a job.' The staff's mindset is much more entrepreneurial, authentic and strategic … [and] you are surrounded by people you actually enjoy!"

Unfortunately, families also carry grudges and bad blood, some going back to childhood. For such reasons, serial entrepreneur and Camping World CEO Marcus Lemonis of CNBC Prime's "The Profit" is by no means sold on the family business model.

"Trust is the upside," he said in an interview. "But the downside is having work leak over into life, and spilling over onto the dining room table."

Some families with a volatile personal mix have buckled under the strain of business, with explosive results. Read ahead to see 10 examples of family businesses gone bad.

By Daniel Bukszpan
Posted 3 Sept. 2013

Don Arden and Sharon Osbourne

Frederick R. Bunt | Evening Standard | Getty Images and Facebook

Don Arden was a British music impresario who managed Black Sabbath and Electric Light Orchestra, two of the most popular rock bands of the 1970s. Singer Ozzy Osbourne left Black Sabbath in 1979, but Arden continued to run the band while also signing the newly solo vocalist to his label, Jet Records. Arden's daughter, Sharon, had been working for her father, but by 1982 she was both wife and manager to the ascendant singer.

Things went sour when Sharon Osbourne tried to break Ozzy's contract with Jet and sign him to a different label. Arden sued her in a case eventually settled out of court. He walked away with $1 million, but the legal action damaged his relationship with his daughter so severely that the two didn't speak for almost 20 years. Arden died in 2007.

Jim Mitchell and Artie Mitchell

Source: AP

Brothers Jim and Artie Mitchell owned the O'Farrell Theater, an X-rated venue in San Francisco. They produced such legendary adult films as 1972's "Behind the Green Door," which cost $60,000 to make and earned over $25 million. The brothers used the proceeds to open theaters throughout California, and for a while they were the smut kings of the Golden State.

Younger brother Artie became addicted to drugs and alcohol, according to The San Francisco Chronicle. On Feb. 27, 1991, Jim shot him to death in what his defense lawyers characterized as "an intervention gone awry." He was found guilty of voluntary manslaughter and sentenced to six years in prison.

In 2000, Charlie Sheen and Emilio Estevez portrayed the Mitchells in the Showtime movie "Rated X."

Noel Gallagher and Liam Gallagher

Source: Facebook

Oasis was a British rock group best known for the 1995 song "Wonderwall," which peaked at No. 8 on the U.S. Billboard chart. The group featured lead singer Liam Gallagher and his brother Noel on guitar, and according to the U.K.'s The Guardian, they had a history of public feuding and physical brawling—onstage and offstage—that plagued their entire career.

The final straw came on Aug. 28, 2009, before a festival appearance in Paris, when Liam allegedly broke his brother's guitar. The band never performed, and Noel took to its website to announce his permanent departure.

"I simply could not go on working with Liam a day longer," he said. He went on to form Noel Gallagher's High Flying Birds, while Liam put together the group Beady Eye.

Raymond Kwok, Walter Kwok and Thomas Kwok

Mike Clarke | AFP | Getty Images

Sun Hung Kai Properties is one of the largest real estate companies in Hong Kong, and brothers Raymond and Thomas Kwok are its co-chairmen and managing directors. Their oldest brother, Walter, had served as chairman and chief executive for 18 years, but he left he took a temporary leave in February 2008 for "personal reasons."

According to the Hong Kong newspaper The Standard, an unnamed source said that the leave was the result of Walter's extramarital affair with an employee. Kwong Siu-hing, the company's largest shareholder and the mother of the brothers, is the one who forced him out.

Raymond and Thomas Kwok have since been arrested on suspicion of bribery and have pleaded not guilty.

Kit Culkin and Macaulay Culkin

Kit Culkin, left, and Macauley Culkin in 1991
Vinnie Zuffante | Getty Images

Kid actor Macaulay Culkin starred in the 1990 hit film "Home Alone." Kit Culkin, a former child actor himself, was his son's manager. According to New York magazine, he secured a rate of $8 million per film for his megastar child, who characterized his dad as "a screamer" and "an intimidator." When the parents began divorce proceedings, the question of which one would control Macaulay's fortune became a point of contention.

'According to The Chicago Tribune, the issue was resolved by Manhattan Supreme Court Judge David Saxe, who severed the professional relationship between father and son, and put the family accountant in charge of the actor's money until he turned 18.

Sadly, the legal problems drove a persistent wedge between father and son, and a 2012 article in the U.K.'s Daily Mail said that they have not spoken in the decade and a half since the dispute.

Chris Hutcheson and Gordon Ramsay

Dave M. Benett | Getty Images and Getty Images

Celebrity chef Gordon Ramsey is renowned for yelling at hapless restaurateurs on the television show "Hell's Kitchen." His father-in-law, Chris Hutcheson, was his business partner, but according to the U.K. publication The Telegraph, that arrangement ended in October 2010 when the chef fired him for allegedly taking money from the business for "personal use"—suspected to be the financing of multiple extramarital affairs.

Hutcheson sued his son-in-law for unfair dismissal and unpaid wages. The whole story came ended last year, when the two parties reached a settlement out of court.

"The terms of the settlement are confidential but we can confirm that Chris Hutcheson is no longer a director or shareholder of Gordon Ramsay Holdings and all civil litigation and employment tribunal claims brought by each of the two parties and other family members have been withdrawn," Ramsay's publicist said in a statement.

Herbert Haft and Robert Haft

Dennis Cook | AP

Herbert Haft was the founder of Dart Drugs. He and his son Robert took the proceeds from the sale of that discount chain and became what The New York Times called "a couple of much-feared corporate raiders." But their relationship soured in the 1990s, when Herbert "abruptly fired" his son, according to The Washington Post.

The patriarch became estranged from all three of his children and divorced his wife. Their rift was never repaired, and many of the businesses that Herbert and Robert Haft had acquired were sold or went into bankruptcy.

Two weeks before he died, in 2004, Haft remarried from his hospital bed, having cut all his children out of his will.

Dave Davies and Ray Davies

Source: Christie Goodwin | Redferns | Getty Images and Matt Gibbons | Wikipedia

The Davies brothers were the core of The Kinks, an influential British rock group whose chart-topping 1964 single, "You Really Got Me," still thrills. Despite their international success, Ray Davies and Dave Davies were involved in what the U.K.'s Daily Mail referred to as "one of the longest-running feuds in rock 'n' roll."

Dave told the paper about a 1980s mixing session that was just one of many instances in which the siblings came to blows. "We started fighting," he said. "The manager was crying. He said, 'I've never seen two human beings go at each other like that.' "

The band finally split for good in 1996. Dave said a reunion is unlikely because of his brother, whom he calls "an a--hole." Still, the bonds remained strong. "I could never not love Ray," Dave said in the same interview. "He's my brother."

Edmonia Sue Coleman, Gary Coleman and W.G. Coleman

Ron Galella | WireImage | Getty Images

Gary Coleman was best known for playing the impish Arnold Drummond on "Diff'rent Strokes." During the 1980s, the TV show made him one of the most recognizable pop culture personalities in the U.S. But when it ended its run in 1986, his career dried up—as did his funds.

In 1989, Coleman sued his adoptive parents, Edmonia Sue and W.G. Coleman, and business advisor, Anita De Thomas, for mismanaging his money and misappropriating it for personal use. He won and was awarded $1.3 million.

Coleman died in 2010 of a brain hemorrhage sustained in an accident, according to The Associated Press.

Beyoncé Knowles and Mathew Knowles

Samir Hussein | WireImage | Getty Images and Brian Ach | WireImage

Since she was one-third of the singing group Destiny's Child, Beyoncé Knowles has been one of the biggest recording stars in the world. Her father, Mathew Knowles, managed that group and continued to manage Beyoncé when she went solo, but she fired him in 2011. Documents filed in District Court in Harris County, Tex., indicate that she believed he had taken money to which he was not entitled.

Mathew filed his own petition, alleging that the concert promoter Live Nation had contrived this story to force him out.

"Upon information and belief, after failing to secure the rights to Beyoncé's world tour, Live Nation agents or representatives made statements to Beyoncé, alleging that [Knowles] had stolen money from Beyoncé on her most recent tour or otherwise taken funds," it said. A representative from Live Nation had no comment.

Still, Mathew Knowles seems to have taken his ouster in stride, if his statement to The Associated Press is any indication. "Business is business and family is family," he said. "I love my daughter and am very proud of who she is and all that she has achieved."

The Profit

When Marcus Lemonis isn't running his multibillion-dollar company, Camping World, he goes on the hunt for struggling businesses that are desperate for cash and ripe for a deal. In the past 10 years, he's successfully turned around more than 100 companies.

He's bringing those skills to CNBC Prime, putting over $2 million of his own money on the line. In each episode, Lemonis makes an offer that's impossible to refuse: his cash for a piece of the business and a percentage of the profits.

And once inside these companies, he'll do almost anything to save the business and make himself a profit—even if it means firing the president, promoting the secretary or doing the work himself.