Fashion partnerships can provide brands with a new route to success. As part of our Fashion Business Survival Guide, our industry experts offer their advice on fashion partnerships and joint ventures. Founder and CEO of Fashion Mingle, Melissa Shea, talks with three panelists about the difference between joint ventures and business partnerships, including what each has to offer to a growing fashion business. This discussion illustrates pros and cons to help you make the best choice for your next big opportunity.
10 Tips for Fashion Partnerships and Joint Ventures
10 Things to Know About Joint Ventures and Fashion Partnerships:
- A partnership doesn’t have to be a 50-50 ownership.
- Members retain ownership of their businesses in joint ventures.
- Be cautious about verbal or side agreements.
- Research the person you are partnering or venturing with.
- Partner cautiously.
- Disputes are inevitable.
- Make sure you define responsibilities.
- Make sure you keep control of your intellectual property.
- Keep opinions balanced in a business partnership.
- Discuss the exit plan.
Melissa begins by asking Shirin Movahed, a business lawyer with more than ten years of experience, to define the difference between a joint venture and a business partnership. Shirin emphasizes how there is a functional difference between the two, where members of a joint venture have teamed up for a particular purpose or project. On the other hand, those involved in a partnership have come together to run a common business.
According to panelist Catherine Schuller, a fashion show and event producer teaching at FIT and LIM in New York City, joint ventures are superior to business partnerships because of the time and flexibility the former offers. Without bringing money to the table, it’s difficult to figure out how to split the endeavor equally. CEO of TRUE Model Management Dale Noelle adds that joint ventures provide great opportunities for development, allowing brands to discover who they can trust as they work to plan future deals.
A partnership doesn’t have to be a 50-50 ownership.
Shirin highlights how in joint ventures and business partnerships it’s not always necessary for the collaboration to be 50-50 or to follow an equal profit revenue distribution. If one party is incurring the majority of the expenses, they may also be entitled to a higher proportion of the profit.
Members retain ownership of their businesses in joint ventures
The members of a joint venture own whatever resources they bring to the table. The individuals’ resources are not free to everyone involved in the collaboration, and it’s up to the owner to protect their business interests.
Be cautious about verbal or side agreements.
When entering into partnerships or joint ventures, be cautious of verbal or side agreements. To ensure that all agreements are law-abiding and credible, document them in a written legal contract from the start.
Research the person you are partnering or venturing with.
Make sure to observe current business relationships and behaviors of the people you are considering working with, and be aware of any cultural differences. Differing opinions and incompatible working styles can affect a business or collaboration in unexpected ways.
Partner cautiously.
When forming a business partnership, it’s important to find a person with interest or experience in an industry relevant to your business. Only when a person is interested in your industry will they truly be able to value your business ideas. To find the correct partner, educate yourself on what investors are looking for in the current scenario to prove that your business has global potential.
Disputes are inevitable.
Shirin also points out how in business partnership or joint ventures, one needs to be prepared to address situations of dispute in a manner that minimizes loss. Keep in mind that the probability of disputes should not be neglected, and have a mediator ready as a neutral third-party advisor who can provide possible options for solving existing conflicts.
Make sure you define responsibilities.
Outlining the roles of everyone involved in the joint venture or business partnership from the start will prevent conflicts in future endeavors. Make a record of who is responsible for what, because the heart of all agreements and related failures in a venture or partnership can be traced back to not thinking ahead.
Make sure you keep control of your intellectual property.
A business partnership leads to the formation of new property, and every individual needs to keep track of their own intellectual property that was invested in the process. It is the right of the individual to negotiate any related agreements. Without doing so, it is likely that larger entities involved in the partnership will claim ideas as their own and exploit smaller contributors.
Keep opinions balanced in a business partnership.
In the end, every partnership comes down to what you are bringing to the table. If you feel that you are not being heard, try to recognize the value you are offering while making sure that you are also being given some sort of value in return.
Discuss the exit plan.
While it may sound unnecessary, it’s important to discuss who is entitled to what when exiting the partnership or venture. Make sure to have this conversation before embarking on your journey, and find someone who is equally excited about your business strategies. This will not only save time in the future, but can also be essential to keeping your business alive.
If you’d like to explore a business partnership and joint venture, sign up for a free Fashion Mingle profile and start connecting with fellow industry professionals today.
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