How to Draft Joint Venture Agreements
There are a number of ways in drafting International Joint Venture agreements. As business grow, expands and become more complex, companies in search for new markets and profits resort to forming an international joint venture. The set up includes profit and resource sharing. Thus, it is imperative that companies that are forming the venture are in good terms with regards to the terms and conditions.
There are several key points parties should consider. Several of these are questions like the key businesses that needs to be retained, the specifics of fund and resource sharing, the key people involved in the agreement, their trade secrets, and lastly the cost-benefit plan of resource and profit sharing actions. Added to this, a result-oriented mindset is highly appropriate in order for both parties to reach their target profit. To do this, parties should look into the gross revenue of the venture and track the radius of the contribution to both companies brought by the venture.
A step-by-step strategic planning of action in doing this is vital to the new-formed company. This endeavor is known to have three major stages. The planning, implementation and post venture stage. During the initial stages of the venture, both companies should realize the practical reasons for forming a joint venture. In the latter stage of the planning, few of the most important aspects of the venture should be considered; these are as follows:
Cooperation agreements
Sale of assets
Joint venture by contract
Transfer of Technology
Turn-key contracts
Franchise contracts
Distribution and Agency contracts
Definition of their joint venture
Prior to signing the contract, Letter of intent with annexed legal documents is presented by the parties with their lawyers to legalize the whole thing.
A good example of a successful company who customarily opt for venture is the Danone group, a French food product company based in Paris, France. This company is considered to be the world leading fresh dairy product maker who has ventured with several local companies in the Middle East and South East Asia like Al Safi in Saudi Arabia, Yakult in India and Vietnam in Alquerνa in Colombia (2007), and Mengniu in China.
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