A partnership exists when two or more persons or entities associate to carry on a business for profit as co-owners. Partnerships may be structured as general partnerships or limited partnerships depending on the participation and liability of the parties.

 

The advantages of a partnership or joint venture include: (a) greater control than a Distributorship/Dealership, licensing arrangement or franchise;

(b) sharing of profits in accordance with the partnership agreement;

(c) flexibility in structuring the relationship and growing the business; and

(d) few regulatory issues.

 

The primary disadvantages include all of those associated with Company-Owned Outlets, as well as the potential for partnership disputes. A general partnership is not covered by the Federal franchise law.

However, a limited partnership may be covered by the Federal franchise law, and the elements of a franchise and business opportunity under both Federal and state law should be considered when structuring or terminating limited partnership relationships.