A temporary business partnership is an arrangement that is entered into between two or more businesses or professionals. Usually, the arrangement involves collaboration between the parties in order to achieve a specific business aim. Such arrangements help the parties pool their resources in order to maximize their efficiency in producing or marketing products or services. The partnership may be entered into through an oral agreement, but a written agreement is usually preferable so the parties have a working record of the terms.
What Are Some Benefits of Business Partnerships?
Business partnerships offer many benefits, including:
- Shared clients and customers
- Referrals and commissions for each party within the bounds of law, as certain commissions are prohibited by law such as some professionals being prohibited from referring clients to one another for a fee
- Reduced manufacturing efforts
- Shared services
- Greater networking and distribution channels
For instance, a ketchup company may choose to do a promotional campaign with a hot dog company. This might increase each company’s exposure to the other company’s customer base. Also, the agreement might allow the parties to use each other’s equipment and tools, which can be helpful if the companies are creating new products or new packaging.
What Is the Difference Between Joint Ventures and Joint Enterprises?
Temporary business partnerships are often classified as either joint ventures or joint enterprises. A joint venture is a more specific, directed effort at achieving a specific goal. For instance, the parties may create a partnership to form a joint venture aimed at promoting one specific type of product. When the parties finish creating or marketing the product, the venture may expire, and may be renewed in the future if desired.
A joint enterprise is often less formal and more of a general collaboration between the businesses. An example of this is when two companies come together to research a particular area of the market. The joint enterprise may not have a specific goal, but may terminate for other reasons. For instance, the enterprise may terminate when the parties are done conducting surveys on their inquiry, or when they have enough data to proceed with other activities.
Seeking Legal Help for Temporary Business Partnership Laws
Each state may have different rules when it comes to creating or honoring a temporary business partnership. You may wish to hire a business lawyer if you are considering creating a business partnership arrangement. Your attorney can help you draft and review a partnership contract. Also, if any legal disputes arise, your attorney can help you file a lawsuit if necessary to recover damages.