What is a joint venture?

A joint venture is defined as a temporary partnership formed between two or more parties to collaborate on a specific project or business activity. This arrangement allows the parties to combine resources, share risks, and pool expertise for the duration of the project, which might not be feasible for any single entity to undertake alone.

The essence of a joint venture lies in its temporary nature and its focus on a particular objective or project. This distinguishes it from other business structures like permanent entities, which remain operational indefinitely or until dissolved, and franchises, which involve ongoing business relationships governed by franchising agreements. Additionally, a sole proprietorship with multiple owners typically lacks the collaborative features and limited liability aspects usually associated with a joint venture. In essence, a joint venture is an effective way for businesses to work together while limiting their commitment to a specific scope and timeframe.