There are a few more things that go into these types of agreements, from approvals to audits, but this crash course should give you a foundation to intelligently talk to your consultants about the terms of the partnership or any other agreement you enter into. Host country laws may require that a certain percentage (often 51 percent or more) of manufacturing or mining operations be owned by U.S. nationals, limiting U.S. companies` local participation to minority interests in joint ventures. Despite these legal requirements, it may be desirable for you, as a U.S. company, to enter into a joint venture with a foreign company to spread the high costs and risks often associated with overseas operations. The local partner is likely to bring to the joint venture its knowledge of the customs and tastes of local consumers, an established distribution network and valuable business and political contacts. In general, the more value you offer, the more leverage you need to request a prepayment. When working on licensing agreements where one party (the licensor) gives the other party (the licensee) the opportunity to use the licensor`s trademarks on products, for example, the more popular the characters are in the licensee`s target market, the higher the payment that the licensor may require. This can be a dollar amount per item sold or a percentage of sales or profits. Although joint venture agreements are similar to a partnership agreement, there are still some differences. A joint venture agreement is used in the commission for a single activity for a certain period of time. Partnership agreements indicate an ongoing, long-term relationship.
Thus, a joint venture consists of sharing capital, rewards, liabilities, technology, etc. These business units succeed when the goals of the two companies converge, when the local partner has the desire to learn from the working style of the foreign company, or when both have the desire to take advantage of the market and obtain monetary advantages. The success of the joint venture often depends on the entrepreneurial skills of the local partner and the technological improvement of the foreign partner. Joint ventures for construction companies allow both parties to maximize their returns and performance. The types of joint ventures in construction companies include: Business lawyers are experienced in translating them into the best joint venture agreement for your specific situation based on the information provided. Even if you already have a contract in hand, your lawyer can perform a simple or complex review that ensures the agreement is legal and fair. There are different structures for which to get paid when licensing your intellectual property, which largely depend on the industry, leverage, and aspects of the business. The most common joint venture licensing agreement is collaboration in the joint development of a product or technology. Other variants include giving one of your products to your JV partner to add to their package in exchange for a portion of the profits, or with a company that has access to a market where your product could easily and profitably go.
Another variant is a joint venture with a company that sells complementary products that you offer as an upsell. If you`re selling software that helps customers with a specific task, offer another set of software products from a partner to help you with a related task, or a program that helps with another part of a complex project. This works great for startups that can only offer one main product. A Canadian biofuels company has announced a $125 million deal that expanded operations to China. It includes rights to their conversion process technology, which converts urban waste into biofuels, and proprietary equipment manufactured specifically for the conversion process. In return, the company received an agreement from #licensing for its technology and stake in a joint venture with a Chinese company. A joint venture is another agreement that allows a company to enter foreign markets. As the name suggests, the company enters into an agreement with a foreign company and helps raise equity for the project. The two companies are then equal partners of the company and also assume the same responsibilities.
In addition to the money, the local partner can call on a team of professionals and expertise to market the product, while the foreign partner can offer its technical know-how in such a joint venture. How to Choose Between Types of Licensing Agreements Benefits of Technology Licensing Technology licensing allows you to quickly enter a foreign market and carries less financial and legal risk than manufacturing abroad or participating in a joint venture abroad. It also facilitates the overstepping of tariff and non-tariff barriers to trade. This makes it attractive for small businesses or those with little international experience. It can also be used to acquire foreign technology through cross-licensing or retrocession clauses that grant rights to use improved technologies developed by a licensee. It`s also not limited to manufacturing – franchising is also a form of technology licensing. Dozens of franchise concepts are transformed into profitable businesses each year, most of which were founded in the United States. It is useful to organize a file with important documents related to the joint venture. Here are a few things to incorporate into your initial consultation: Joint ventures for technology companies are perfect because they allow for maximum flexibility. The types of joint ventures in tech companies include: If you make a percentage amount, you know that the higher you are in the income statement, the less possibility there is for manipulation. This means that it`s harder to discuss revenue generated over a given period, while gross margin, operating profit, or other income statement metrics have a bigger impact (which can be good or bad, depending on which side of the deal you`re on).
This is the area or channel where the rights of the partnership are granted. It can be a geographic area (you have rights in Europe, Missouri, St. Louis, or even four blocks from Main Street), a distribution channel (grocery stores, pharmacies, mass market chains), or media (online, TV, movie, etc.). The more territories or media involved, the more valuable the agreement is. The above examples of joint venture agreements are great for verification as they are used by government agencies. They apply to other business situations instead of your specific goals, which means that hiring business lawyers to draft an original agreement for your project is the most practical approach. Examples of licenses include companies that use the design of a popular character, e.B. Mickey Mouse, on their products. Another example would be a clothing manufacturer like Life is Good, which licenses its creations and brand to a local company in a particular country.
The more exclusive the relationship, the more expensive it is, obviously, because it discourages the other party from entering into additional relationships. Note that the entire agreement may be exclusive or there may be a provision for exclusivity to another metric (e.B geographic area). Whatever the project, a joint venture is an easy way to create business benefits for both parties. The possibilities are endless in terms of joint ventures. However, you need to have a strong joint venture agreement in place to make sure everyone is on the same page. If you enter into any type of agreement, including but not limited to a license or partnership agreement, each party will rely on the other party`s information that is true. For example, if you license your article, the other party will want to rely on you to confirm that your article does not infringe copyright. If you provide such legal certainty, it is an insurance and/or guarantee.
If it turns out that they are not true, the other party has filed a lawsuit (may hold you liable) for “violating” these representations or warranties. ==References=====External links===Licensors should also consult qualified legal counsel in the host country for advice on applicable local laws and assistance in ensuring that the foreign government approves the agreement. Sound legal advice and thorough investigation into the potential licensee and host country increase the likelihood that your license agreement will be a profitable transaction. Rand Brenner is an intellectual property professional whose passion is to help inventors, startups, and companies of all sizes use licenses to transform their intellectual property into revenue-generating products, services, and technologies. His decades of experience range from medical devices to food technology and consumer goods. It has licensed some of Hollywood`s biggest entertainment blockbusters, including the Batman movies (1 and 2) and the number one action TV series for kids, the Mighty Morphine Power Rangers. Rand talks about bachelor`s degrees and is a sought-after speaker at investment conferences, trade shows, colleges, and startup events. .