Succeeding at Business in Southeast Asia

CHAPTER 10Joint Ventures and Franchising: The Pros and Cons

The fallacy: “A joint venture or a franchise is much easier than setting up my own operations because I’ll have a partner on the ground to do a lot of the work for me.”

I look at forming a joint venture or setting up an international franchise as if I were deciding to marry, but often companies jump into a joint venture without looking at all their options. Instead of being smart and doing their due diligence, they jump into a partnership, which in the United States may or may not be easy to dissolve. In Asia, though, it will be a difficult process and more than likely all beneficial claims in the breakup will go to the local company, potentially including the intellectual property.

The most important part of forming a joint venture is spelling things out ahead of time. In this way, it’s different than a marriage because in a marriage you will both (hopefully) understand that you’re working toward a common goal. However, in a joint venture the partners may not have a common goal. One may desire world domination or local growth; the other may be satisfied with building something that the owner can live off nicely and eventually sell to travel the world. It’s also important to understand that your partner has a reason for being in a joint venture relationship with you. You need to make sure your partner’s interests align with yours. For example, do you intend to start with them in Taiwan and move through the rest of ...