QUESTION
Can I collaborate with others to sell a product without forming a partnership or association?
Asked on Jul 21st, 2017 on Business Law - Texas
More details to this question:
I own a nonprofit business that produces educational products. Two of my friends also own nonprofit businesses: one's is philanthropic and raises money for community development, and the other's provides public governance training products. We would like to collaborate and pool our resources to design a series of training materials that we sell under a joint initiative. If we create a collaboration agreement that says that each of our businesses are independent contractors of each other, can we then work together to design, deliver, and advise on this initiative, potentially marketing it as a partnership, without risking forming a general partnership or unincorporated nonprofit association? We are trying to work together without becoming an association (for profit or not). Can a collaboration agreement that states we are independent contractors and not partners avoid this, even if our activities meet the statutes for an association?
1 ANSWER
I know of no reason that you (whether "you" is the individual owners of the businesses or the businesses themselves) can't enter into a joint venture agreement which governs the way that you will interact in connection with a particular venture This would not create any sort of general partnership. You can also create a separate entity, of which you would each own 25% (or however you wanted to divide it), to operate the joint venture. However, this doesn't address the issue of your non-profit status, which could be endangered if the non-profit entity enters into a for profit venture.
Incidentally, I don't know what you mean about forming an "association." To the best of my knowledge, an "association" is not a form of legal entity, like a corporation, llc, limited partnership, etc. (at least in New York; I don't know about Texas) and I'm unaware of any "statutes for an association."
Answered on Jul 24th, 2017 at 1:21 PM