diff --git a/src/openocd.c b/src/openocd.c
index 94fab3a94..83329b519 100644
--- a/src/openocd.c
+++ b/src/openocd.c
@@ -297,8 +297,10 @@ static int openocd_thread(int argc, char *argv[], struct command_context *cmd_ct
 
 	if (init_at_startup) {
 		ret = command_run_line(cmd_ctx, "init");
-		if (ERROR_OK != ret)
+		if (ERROR_OK != ret) {
+			server_quit();
 			return ERROR_FAIL;
+		}
 	}
 
 	ret = server_loop(cmd_ctx);
diff --git a/src/server/server.c b/src/server/server.c
index f6889a01a..8009d408f 100644
--- a/src/server/server.c
+++ b/src/server/server.c
@@ -132,7 +132,9 @@ static int add_connection(struct service *service, struct command_context *cmd_c
 		free(out_file);
 		if (c->fd_out == -1) {
 			LOG_ERROR("could not open %s", service->port);
-			exit(1);
+			command_done(c->cmd_ctx);
+			free(c);
+			return ERROR_FAIL;
 		}
 
 		LOG_INFO("accepting '%s' connection from pipe %s", service->name, service->port);
@@ -191,7 +193,13 @@ static int remove_connection(struct service *service, struct connection *connect
 	return ERROR_OK;
 }
 
-/* FIX! make service return error instead of invoking exit() */
+static void free_service(struct service *c)
+{
+	free(c->name);
+	free(c->port);
+	free(c);
+}
+
 int add_service(char *name,
 	const char *port,
 	int max_connections,
@@ -235,7 +243,8 @@ int add_service(char *name,
 		c->fd = socket(AF_INET, SOCK_STREAM, 0);
 		if (c->fd == -1) {
 			LOG_ERROR("error creating socket: %s", strerror(errno));
-			exit(-1);
+			free_service(c);
+			return ERROR_FAIL;
 		}
 
 		setsockopt(c->fd,
@@ -255,7 +264,9 @@ int add_service(char *name,
 			hp = gethostbyname(bindto_name);
 			if (hp == NULL) {
 				LOG_ERROR("couldn't resolve bindto address: %s", bindto_name);
-				exit(-1);
+				close_socket(c->fd);
+				free_service(c);
+				return ERROR_FAIL;
 			}
 			memcpy(&c->sin.sin_addr, hp->h_addr_list[0], hp->h_length);
 		}
@@ -263,7 +274,9 @@ int add_service(char *name,
 
 		if (bind(c->fd, (struct sockaddr *)&c->sin, sizeof(c->sin)) == -1) {
 			LOG_ERROR("couldn't bind %s to socket: %s", name, strerror(errno));
-			exit(-1);
+			close_socket(c->fd);
+			free_service(c);
+			return ERROR_FAIL;
 		}
 
 #ifndef _WIN32
@@ -281,7 +294,9 @@ int add_service(char *name,
 
 		if (listen(c->fd, 1) == -1) {
 			LOG_ERROR("couldn't listen on socket: %s", strerror(errno));
-			exit(-1);
+			close_socket(c->fd);
+			free_service(c);
+			return ERROR_FAIL;
 		}
 	} else if (c->type == CONNECTION_STDINOUT) {
 		c->fd = fileno(stdin);
@@ -302,13 +317,15 @@ int add_service(char *name,
 		/* we currenty do not support named pipes under win32
 		 * so exit openocd for now */
 		LOG_ERROR("Named pipes currently not supported under this os");
-		exit(1);
+		free_service(c);
+		return ERROR_FAIL;
 #else
 		/* Pipe we're reading from */
 		c->fd = open(c->port, O_RDONLY | O_NONBLOCK);
 		if (c->fd == -1) {
 			LOG_ERROR("could not open %s", c->port);
-			exit(1);
+			free_service(c);
+			return ERROR_FAIL;
 		}
 #endif
 	}
@@ -425,7 +442,7 @@ int server_loop(struct command_context *command_context)
 				FD_ZERO(&read_fds);
 			else {
 				LOG_ERROR("error during select: %s", strerror(errno));
-				exit(-1);
+				return ERROR_FAIL;
 			}
 #else
 
@@ -433,7 +450,7 @@ int server_loop(struct command_context *command_context)
 				FD_ZERO(&read_fds);
 			else {
 				LOG_ERROR("error during select: %s", strerror(errno));
-				exit(-1);
+				return ERROR_FAIL;
 			}
 #endif
 		}
@@ -552,7 +569,7 @@ int server_preinit(void)
 
 	if (WSAStartup(wVersionRequested, &wsaData) != 0) {
 		LOG_ERROR("Failed to Open Winsock");
-		exit(-1);
+		return ERROR_FAIL;
 	}
 
 	/* register ctrl-c handler */
@@ -570,10 +587,18 @@ int server_preinit(void)
 int server_init(struct command_context *cmd_ctx)
 {
 	int ret = tcl_init();
-	if (ERROR_OK != ret)
+
+	if (ret != ERROR_OK)
 		return ret;
 
-	return telnet_init("Open On-Chip Debugger");
+	ret = telnet_init("Open On-Chip Debugger");
+
+	if (ret != ERROR_OK) {
+		remove_services();
+		return ret;
+	}
+
+	return ERROR_OK;
 }
 
 int server_quit(void)
diff --git a/src/server/telnet_server.c b/src/server/telnet_server.c
index 0f5769a20..e5eb4bb23 100644
--- a/src/server/telnet_server.c
+++ b/src/server/telnet_server.c
@@ -624,9 +624,8 @@ int telnet_init(char *banner)
 		return ERROR_OK;
 	}
 
-	struct telnet_service *telnet_service;
-
-	telnet_service = malloc(sizeof(struct telnet_service));
+	struct telnet_service *telnet_service =
+		malloc(sizeof(struct telnet_service));
 
 	if (!telnet_service) {
 		LOG_ERROR("Failed to allocate telnet service.");
@@ -635,13 +634,16 @@ int telnet_init(char *banner)
 
 	telnet_service->banner = banner;
 
-	return add_service("telnet",
-		telnet_port,
-		CONNECTION_LIMIT_UNLIMITED,
-		telnet_new_connection,
-		telnet_input,
-		telnet_connection_closed,
+	int ret = add_service("telnet", telnet_port, CONNECTION_LIMIT_UNLIMITED,
+		telnet_new_connection, telnet_input, telnet_connection_closed,
 		telnet_service);
+
+	if (ret != ERROR_OK) {
+		free(telnet_service);
+		return ret;
+	}
+
+	return ERROR_OK;
 }
 
 /* daemon configuration command telnet_port */