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I'm reflecting on the ideas of businesses partnering with other businesses who are targeting the same audience. The idea would be to "partner together" and help promote one another.

eg. Business A and Business B both target a certain demographic of consumer. Both businesses decide on mentioning each other's business in a newsletter or in a blog or something once a month.

My questions:

  • Are these referred to as partnerships or strategic alliances? What's the difference?

  • What are some different mutual terms such parties can agree on? eg. link on websites, mentioning in blogs once a month, etc? These need to be concrete terms so there is no confusion.

  • What legal issues would one need to watch out for? Any advice on finding a document to be used for such a formal relationship?

Thanks

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3 Answers

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Partnerships tend to be targeted for specific applications and projects while a strategic alliance usually means you broadly align to each others vision. Now, there are various levels of both. What you want to do seems more like a partnership than a strategic alliance.

In fact, it sounds more like a mutual promotion deal rather than a partnership since it appears that you will not be jointly developing anything. If you do plan on doing some development, then that would require a joint development agreement, which would include aspects of promotion.

There are tons of terms that can be included in a mutual promotion deal. Most center around the activities that each party will undertake for the other. Things like:

  • Press releases
  • Links to websites
  • Joint promotion at trade shows
  • Most favored nations on pricing and referrals.
  • New customer lead generation.

I don't know of any references that you can download. Of course, there are several legal issues you need to watch out for. Those include:

  • Length of the deal
  • Canceling the deal
  • What happens if some of the terms are breached
  • Compliance measures
  • How to deal with competitive deals

In this circumstance, it's probably best to have as much reciprocity (e.g. equal terms) for both sides. Anything that skews responsibilities or benefits can be tricky to sort out later.

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Aha! I think I'm looking for more of a long-term promotional relationship. I'm not exactly sure what to call it, but I think this is fine. I'll do X for you, you do Y for me, with the end goal of helping drive customers to each other. I need to look into legal forms for forming such a relationship. Is it safe to assume I should do that? Most of the people I want to do this with I've already built credibility/trust with. I imagine it's good to explicity define any gray areas, regardless. Is this called a "mutual promotional deal" or does it have other names too? Thank you! – Matt Jan 26 '10 at 21:35
Mutual or Joint Promotion Agreement is what I would call it. You do need a contract that lays about the deal. Mostly because of the grey areas you mentioned. Your potential partners should want that as well. – Jarie Bolander Jan 27 '10 at 13:09
up vote 2 down vote

Excellent question! I am not going to answer your question directly, but this information will likely help you navigate this issue.

If you do not form a partnership, and instead create a "strategic alliance", there is a major risk to all members of the alliance. Each member now stakes their own reputation on the actions of the other members of the alliance, without being able to control the other members. As well, each member must contribute their own clients - sounds easy in theory, but in practice, this doesn't often work.

If you form a partnership, then each partner is responsible for the entire relationship, and partners can enforce behavior on one another through contractual agreements. While you could try creating this with a strategic alliance, there is little grounds for a contract, so you may run into significant complications.

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Thank you! Very valid points. I think I want more of a "mutual promotion deal." The main purpose would be to promote each other a little here and there. You raise valid points, though, for if the idea ever comes up again. :) – Matt Jan 26 '10 at 21:31
up vote 1 down vote

A strategic alliance is where two companies come together for a limited duration of time to achieve mutual goals through the use of each others resources. A joint venture is where two entities come together to form a separate entity.

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