Joint Venture Agreement

As they say, “no man is an island;” meaning one way or another, sooner or later, you will need help to accomplish something from other people. There is no shame in wanting and needing help and support from other people so that you can successfully accomplish you better goal or the goals you set with other people.

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Restaurant Joint Venture Agreement Example

The more you willingly admit the fact that you cannot simply do it alone, the faster and more efficient things get done. In business, it is just the same; once you admit you need assistance from other organizations or companies, the easier for you to succeed. You may also see business agreement examples.

In business, most especially for start-ups, it is common to ask for help from other larger businesses, be it for investment or other measures. Although you have the best interests for both parties involved in mind, it is quite normal for business transactions to go sour especially when you don’t communicate what you would want out of the transaction clearly. You may also like sales agreement samples.

Restaurant Joint Venture Agreement Example

In order to protect what you have invested in your own business as well as the relationship you have built with the individual or other business that you have joined forces with, you need a document that outlines the terms and conditions both of you need to follow for a successful transaction. You may also check out professional services agreement examples.

Real Estate Development Joint Venture Agreement Example

Real Estate Joint Venture Agreement Template Example

What Is Joint Venture Agreement?

A joint venture agreement is an agreement entered into by two or more business companies or individuals with the aim of temporarily coming or teaming up together in order to achieve a mutual goal. The temporary relationship between the joining parties will greatly help with the goal they both have in mind.

This agreement is also called as a co-venture agreement, consortium agreement, cooperative agreement, joint undertaking, JV agreement, and strategic alliance. This simple agreement sets out the terms and obligations that all the involved parties should follow. It also helps set out the nature of the relationship of the parties.

A joint venture is undertaken jointly by two or more parties in the aim pursuing one common goal in a commercial enterprise. This means that two or more individual businesses join forces in order to accomplish one certain business goal. Instead of forming a formal partnership or a new business entity, the joint venture agreement will ensure that all the parties involved can still retain their distinct identities.

Aside from all of that, the joint venture agreement will also allow the parties joining together to continue filing their own tax returns and yet still reap the benefits of sharing resources and risks with other business entities or individuals. A joint venture agreement is a useful document should business decide to come together temporarily just to accomplish certain goals that will benefit them all. You may also see dissolution agreement examples.

In addition, it helps outline each party’s expectations and not only are all the businesses protected, but also the relationship between the people teaming up is protected too.

Inclusions of a Joint Venture Agreement

In order for a joint venture agreement to be effective, all the parties involved must have a clear understanding of what they should bring into the table and what’s at stake. All the information relevant to the venture must be included so that there is a clear and comprehensive presentation of data helping avoid misunderstandings and failed business relationships. You may also like purchase agreement examples.

The following are to be included on a joint venture agreement:

• Place of business
• The type of joint venture
• Venture details, such as its name, address, purpose, etc.
• Start and end date
• Venture members and their capital contributions
• Member duties and obligations
• Meeting and voting details
• Management, dissolution, and assignment of interest details
• Non-compete, confidentiality, and dispute resolution clauses

Example of a Joint Venture  Agreement

Joint Venture Agreement Example

Joint Venture Format Example

Difference between Joint Venture and Partnership

Although both terms have similar principles, there are still quite a few difference to a joint venture and a partnership. It is important to understand the differences between the two since without the joint venture agreement, the law may view your collaboration as a legal partnership and apply the default state laws for tax and liability purposes. You may also see what is a business agreement?

Here are some of the differences between a joint venture and a partnership:

1. A joint venture is only for a temporary period of time, while a partnership is for a permanent basis or indefinite period of time.

2. The relationship between the parties involved in a joint venture is contractual, while a new legal entity is created when businesses or individuals enter into a partnership. You may also like marketing agreement templates and examples.

3. A joint venture only has a limited scope and purpose while there is a broader scope and purpose for a partnership.

4. The parties involve in a joint venture continues to file individual tax returns, while a partnership employs a “pass through” taxation where parties pay tax for the new entity with their personal tax return each year. You may also check out commission agreement examples.

5. A joint venture ensures that all the parties involved are all individually liable; on the other hand, parties involved in a partnership are jointly and severely liable for debts and others issues.

6. There is limited fiduciary duty to a joint venture, while there is a board fiduciary duty to a partnership. Meaning a JV only has a limited legal obligation to one party to act in behalf of the best interest of another. On the other hand, the board of a partnership acts in accordance with the fiduciary duties of care, loyalty, and obedience. You might be interested in commercial agreement examples.

7. Both co-venturers must sign an agreement or contract, while partners can sign agreements or contracts as agents.

8. A joint venture has a custom ownership percentages, whereas a partnership employs a default 50-50 ownership.

Basic Joint Venture Agreement Example

Generic Joint Venture Agreement Example

Joint Venture Agreement Template Example

Why Enter into a Joint Venture Agreement?

There is a higher chance of succeeding if you know that your business could benefit from sharing resources with another company for a limited period of time and limited purpose. You may also see maintenance agreement examples.

Listed below are some of the reasons why companies decide to enter into a joint venture agreement with other companies:

• A joint venture agreement helps create strategic alliances in order to gain access to wider markets.
• It is easier to develop new technologies, products, or services when there is input from other co-venturers that have the right expertise on a specific field.
• Through new networks, business development can be expanded.
• Co-venturers can take advantage of one company’s brand and reputation in order to increase sales.
• The costs for research and development can be lowered through the right collaborations.
• New markets can be penetrated when co-venturers share expertise or relationships.

However, you also need to be reminded that unlike a formally organized partnership, a joint venture is not permanent and are commonly dissolved in the following kinds of situations:

• If the other company buys the other business.
• The conditions of the market continuously changes.
• If professional goals have been accomplished and new goals are developed.
• If the purpose has been fulfilled and even when not.
• The shared goals no longer apply to the co-venturers.
• The time period for the business relationship has lapsed or breached.

Oil Mining Joint Venture Agreement Example

Construction Joint Venture Agreement Example

Benefits and Risks of a Joint Venture

While there are benefits to forming a joint venture, there are also risks that co-venturers have to face. Here is list of some of the benefits and risks of a joint venture:

1. Benefits

• There is access of new research materials from smaller companies for larger companies.
• Since the larger company already has somewhat a strong market presence, the smaller companies can benefit from that.
• Social reality of local area from foreign company can be learned by domestic companies.
• The domestic company can expose foreign companies to new relationships and expertise.
• In order to develop new product and/or services, businesses can experiment outside of its main business.
• The wealth or expertise for all the businesses involved can be merged to a specific area of business.
• There is more financial or technical resources available for the co-venturers.
• A larger capacity for the businesses will be opened anew.
• There is a wider diversification.
• The terms of the relationship can be more flexible and can be controlled by each party.

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2. Risks

• When handled poorly, there can be unclear business objectives.
• The differences in management styles and/or culture can cause miscommunication or misunderstandings.
• A disproportionate amount value than can be brought to one side if their is an asymmetric business relationship.
• There can be a delayed return or loss of investments.
• Imbalance in resources, expertise, or investment is common.

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Conclusion

A joint venture, although not permanent as a partnership, is still a useful, and if managed properly, fruitful business endeavor. It can help individual companies achieve certain goals and objectives; however, if managed poorly, it can also cause misunderstandings and confusion that result to unproductiveness. You might be interested in credit agreement examples.

A joint venture can also help businesses widen their markets and can use the influence of one another to a positive degree that can help their sales. There are quite a few advantages of forming a joint venture, but just like anything else, it also has a few risks. The good thing though is that all the parties involved gets to reap the benefits and disadvantages of the venture. You may also see transfer agreement examples.

A joint venture agreement ensures that the terms and conditions that come with the endeavor are outlined so that all the joining parties can understand before they make it all official. The basic agreement sets out the expectations of all those involved as well as the obligations each has to fulfill.

The business interest of each party is not the only thing protected by the standard agreement, but also the relationship established through the joint venture endeavor of businesses.