A clear agreement is an essential part of building good relations. Consider these ideas: as you can see, there are pros and cons in creating a joint venture, and you should weigh these points before deciding whether this type of arrangement is right for your business. A joint venture could include two companies from different disciplines, working together to develop a new product or offer a new service. Or a company wishing to enter a new geographic market could form a joint venture with a company established in the country or region or with an established presence. For example, BMW Group and Brilliance China Automotive Holdings Ltd. have created a joint venture called BMW Brilliance Automotive Ltd. to produce and sell BMW vehicles in China. Therefore, if you decide to enter into a joint venture with another person or person, it is important that you understand the potential risks and reach a thorough agreement to reduce those risks in order to carry out your business. A Memorandum of Understanding is a description of a transaction being negotiated, with agreements on how the process will progress. Learn more about what is included in a letter of intent and how to write one. You may need other agreements, such as .
B a confidentiality agreement for the protection of trade secrets, which you diving. Before explaining how to create a joint venture, you might ask yourself what the benefits - and risks - of such an agreement are. This type of collaboration seems quite simple, especially compared to the other trade agreements we have listed, so there is a reason why you would not accept a joint venture with another company? For example, the three separate companies Disney, NBC Universal and News Corp created a joint venture by creating a new entity called Hulu. Ford Motor Company and Eddie Bauer entered into a strategic alliance in which they used each other`s brand awareness to attract new customers, but without creating their own unit or pooling their financial resources: Ford placed the Eddie Bauer logo on its high-end SUVs, while Eddie Bauer placed the Ford logo on a set of luggage. Finally, make sure you follow all other rules that may apply to your joint venture at the local, national or federal level. It is worth taking legal advice to identify your best option. How you create your joint venture affects how you operate it and how profits are shared and taxed. It also affects your liability if the company fails. They need a clear legal agreement defining how the joint venture works and how revenues are shared.