A joint venture is an association of persons who enter into an agreement to do business together or to undertake a particular project without losing their independent corporate identity. There are two types of joint venture - contractual joint venture and equity joint venture. In a contractual joint venture, a new jointly owned entity is not created. There is an agreement to work together but there is no agreement to give birth to an entity owned by the parties who are working together. The two parties do not share ownership of the business entity but each of the two parties exercises some elements of control in the joint venture. A typical example of a contractual joint venture is a franchisee relationship. Whereas, an equity joint venture agreement is the one in which a separate business entity, jointly owned by two or more parties, is formed in accordance with the agreement of the parties.
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