If a business, whether minority-owned or not, decides to enter into a joint venture, both the scope and the form of the venture should be clearly defined. The specific duties and responsibilities of each party to the joint venture should be clearly stated, and the allocation and distribution of profits, losses, and revenue should be clearly outlined. The agreement should include a defined term, specific commencement date, termination date, and a description of how the joint venture will be terminated. Restrictive or non-compete covenants should be considered, as well as whether any conflicts may arise from the parties’ business interests not involved in the joint venture. A bank account should be set up where proceeds from the joint venture will be deposited, and the agreement should define how withdrawals from the account will occur. Tax implications should be considered, as well as how to handle any disputes that may arise.
Consultation with an attorney is recommended if you desire to enter into a joint venture, as a multitude of unintended and undesired consequences may result when such agreements are not properly and clearly structured.