I'd offer them a copy of the whole thing and let 'em compete if they want to. Or buy them out for a few grand. Or put the idea on the shelf and pursue something else.

Or tell them YOU want out for personal reasons, but you'd like to have a written agreement saying you could pursue this on your own down the road at some point.

Next time get a boilerplate buy/sell agreement as early as you can... It's like a prenup and provides clear guidelines for parting ways.