General Partnership vs Joint Venture (Video)

Clients often come to my office very excited about a new business that they are hoping to start or purchase from an existing owner. Many times they need financial help, the expertise and knowledge of someone else with experience in the industry, or a combination of both. As a Corporate Attorney, I’ve drafted numerous contracts and agreements throughout the years in an effort to protect my clients while they achieve their company goals. I can appreciate the different types of contracts and the terms contained therein in a way that some of my clients cannot. Sometimes I have to tell them to take step back and really consider all of their options so that they are happy with the arrangement for the duration of the agreement.

For example, a client recently came to me asking to draft corporate documents for them, but also told me that they were looking for an investor to partner up with them for the acquisition of a restaurant. After discussing the pros and cons of having a partner vs. obtaining alternative financing (i.e. bank loan) we discussed the type of relationship they would like to enter into. I asked them if they would like to enter into a General Partnership or a Joint Venture with the prospective partner. This was not something that they considered and they didn’t have a clue about what I was referring to. I thought that it would be useful to highlight the major differences between the two in this post.