Business ventures, whether JVs, partnerships, franchises, team agreements, strategic alliances or one of the myriad types of business relationships a U.S. company can form outside the U.S., are different than the usual risk presented by third-parties under compliance requirements such as those mandated by the FCPA. The problems for companies is that they tend to treat business venture risk the same as third-party risk. They are different and must be managed differently.
The bottom line is that may compliance practitioners have not thought through the specific risks of business ventures such as JVs, franchises, strategic alliances, teaming partner or others as opposed to sales agents or representatives on the sales side of the business. I hope that this will help facilitate a discussion that maybe people will begin to think about more of the issues, more of the risk parameters and perhaps put a better risk management strategy in place.
Three key takeaways:
- Business ventures bring different FCPA risks from third-parties.
- JVs have both external compliance risks and corporate governance risks.
- Use your full compliance tool kit for business ventures in managing the FCPA risk for franchises.