Joint Ventures

What distinguishes a joint venture from a general partnership

A joint venture is typically formed around a specific, often time-limited, project or purpose (a development, a market entry, a shared contract) rather than an ongoing general business relationship. Florida law does not treat 'joint venture' as a distinct statutory entity type; a joint venture is usually structured either as a contractual arrangement between separate businesses or through a newly formed LLC or partnership dedicated to the project.

Choosing the vehicle: contract or new entity

• Contractual joint venture: the parties remain separate businesses and define their collaboration entirely through a joint venture agreement, without creating a new legal entity.
• Entity-based joint venture: the parties form a new LLC or partnership to hold the project's assets, contracts and liabilities, with membership or partnership interests reflecting each party's stake.
• The entity-based approach generally provides cleaner liability separation and clearer tax reporting for the project, at the cost of additional formation and maintenance.

What a joint venture agreement needs to address

• Scope and purpose: precisely what the venture will and will not do, to prevent scope creep from becoming a dispute.
• Capital and resource contributions from each party and how additional funding needs will be handled.
• Governance and decision-making authority, including which decisions require unanimous consent versus majority approval.
• Profit, loss and distribution allocation, which need not mirror capital contributions if the parties agree otherwise.
• Exclusivity and non-compete boundaries where the parties operate in overlapping markets outside the venture.
• Term, wind-down and exit mechanics once the project concludes or a party wants out.

Cross-border joint ventures

Joint ventures are a common vehicle for a foreign company entering the Florida market alongside a local partner, or for a Florida business partnering abroad. These arrangements often intersect with immigration planning where a foreign principal intends to relocate to manage the venture, in which case the venture's ownership and control structure should be built with the applicable visa classification in mind.

Deadlock and exit are the terms most often left unaddressed

Because joint ventures are frequently negotiated with optimism about the underlying project, the agreement often receives less attention on what happens if the parties disagree or the project underperforms. Deadlock-breaking mechanisms and a defined exit or buyout process are as important as the terms describing how the venture will succeed.