What is formed when two or more companies come together to achieve a specific objective and share profits?

A joint venture is an arrangement where two or more companies collaborate to achieve a specific goal while maintaining their individual identities. This type of partnership typically involves pooling resources, expertise, and capital to undertake a project or business activity that benefits all parties involved. In a joint venture, profits and losses are usually shared in proportion to the contribution or agreement made by the parties, which facilitates shared risk and rewards.

By creating a joint venture, companies can leverage each other’s strengths, access new markets, and enhance their competitive advantage without completely merging their businesses. This collaboration allows for greater flexibility and a focused approach toward the specified objective.

Other options such as a partnership typically imply a more permanent arrangement with more extensive involvement, while a franchise arrangement involves one party granting another the right to operate using their brand and business model, usually with established terms of reinvestment and profits. A collaboration agreement is a broader term that may not involve shared profits in the same structured way a joint venture does, often focusing on joint efforts without the intent of forming an independent entity to pursue profit.