A strategic partnership is a contract that was formed on the basis of a mutually beneficial relationship between two business entities. For example, a small business and a larger business might partner for any number of reasons, including market access, common goals, or relationship building. A small or large business may want to partner with a certain non-profit for the purpose of giving back to the community efficiently and effectively, to relationship build, to enhance employee satisfaction, or to support a cause their customers care about. Whatever the reason, the agreement should be written in a legally binding document outlining each parties’ respective responsibilities.
At Wick Law we love helping business owners prepare strategic partnerships that position each party to hit a home run yet protect the businesses and the business owners at the same time. Below are a few of the items that a strategic partnership should include.
What are you each bringing to the table?
The strategic partnership agreement should clearly state what assets will be brought to the partnership by each party. The assets contributed can be financial, but often times the assets are expertise, organizational infrastructure, labor/talent, equipment, or commercial space. If you are bringing certain intellectual property, like code or marketing strategy, or a certain teaching program created by your business, you may want to have a limited license drawn up to permit the use of your product but limit it and retain ownership and control over its use.
What exactly will you each be doing?
A detailed description of the work must be included, this is where you will want to spend some time understanding yours and your partner’s responsibilities.
How long will it last?
The term – how long will this agreement last?
What if you want out?
What if you want to terminate the agreement early, can you? Must you have “cause” to terminate it, or can you walk away any time you like? If you are going to terminate the agreement, how must you do so? Are you required to give a certain type of notice, if so, how do you deliver the notice and how many days’ notice is required?
The relationship of the parties
Make it clear that you are independent contractors if you are performing work for one another.
What’s mine is mine, what’s yours is yours
Confidential information and intellectual property will likely be in play. Make sure you spend time defining what is confidential and defining what your intellectual property is and how it may be used for the purposes of this agreement. Additionally, if any intellectual property is created from the strategic partnership, who will get to own the rights to that asset? These are important things to consider and you should consult an attorney to help navigate you through the process.
If you have contributed IP, outline the limits of its use for the strategic partnership and outline what happens to it after the strategic partnership ends.
Restrictive covenants/no soliciting customers or competing
You may need to state that your customers are yours and the strategic partner may not pursue them. You may need to make sure your strategic partner does not try to compete with you following the termination of the strategic partnership. These are not pleasant things to discuss, and they certainly are not as fun and uplifting as discussing your common business goals and how you plan to tackle them together for a win-win. However, restrictive covenants should not be ignored.
Address liability issues surrounding whatever you will be doing under your strategic partnership. Discuss insurance requirements of each party.
Wick Law, LLC is a small business legal practice, representing owners, investors, and entrepreneurs in all aspects of commercial, corporate, and business law, estate planning, contracts and negotiations, business litigation, and real estate. For more information: Contact 614-572-6366, visit www.mwicklaw.com, or email us at firstname.lastname@example.org. Wick Law, LLC is located in Columbus, Ohio.
(Materials in this article have been prepared by Wick Law, LLC for general informational purposes only. This list is for educational purposes and is not to be considered exhaustive. More items could be added to this checklist based upon the type of transaction or industry standards. These materials do not, and are not intended to, constitute legal advice. The information provided is not privileged and does not create an attorney-client relationship with Wick Law, LLC or any of the firm’s lawyers. This checklist is not an offer to represent you. You should not act, or refrain from acting, based upon any information in this checklist. Wick Law, LLC maintains offices in Columbus, Ohio, and has lawyers licensed to practice in Ohio and in the United States District Court, Southern District of Ohio. The firm does not intend to practice law in any jurisdiction where the firm is not licensed.)