First, let me start by saying this may be a little long, but I really need some input, so if you are business minded, I'd appreciate your input.

I have been working my home bakery business for 3 years and it is thriving.  An acquaintance of mine is buying an old building in town and wants to open a little shoppe (antiques, touristy retail, jewelry), but she also wants to build a kitchen and have me move my operation downtown to bake the goodies that inevitably will draw customers to the shoppe.

I will be, in essence, co-oping the kitchen space but also providing product for her to sell out front.

Does anyone have any experience with this sort of set up who could advise? I'd appreciate it so much. I feel like the potential for this to be a sweet opportunity for expansion of my business but would feel better with more information...

Thanks!

The only thing I would say is to get an attorney involved and make it very clear who's paying for what, who gets what share of profits, whether anyone else would be able to use the kitchen space  or if it's exclusive to you, if you're renting or giving her a percentage of your profits, etc. etc. etc.  This kind of thing can go south very easily unless you  have everything spelled out in advance.

I agree about the going south thing and I definitely want to go in with as much information as possible! Thank you for your input

I think the safest arrangement would be to have clear titles. You would be her tenant and there should be an agreed upon price/term just like any other space you would rent. Then, she would be one of your customers if she will be retailing your products, so you should charge her a wholesale price for agreed upon, advance notice bulk orders. 

Or, if you are going into business together, you should have partnership terms drawn up. There is some good info on the web about things to consider when creating partnerships. 

Don't forget to see if this would effect your home-based business status. Here in my state you can't wholesale (or sell cake to be resold) as a cottage business. So don't forget to look into that aspect as well.