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chip Cooper with another video in our rules of the road series and this one is about how to set up and structure JV or joint venture agreements the typical steps with most online entrepreneurs and internet marketers would be to begin with setting up what we call a direct marketing agreement which is your customer agreement and then as you move into marketing with intermediaries or others your typical next step would be to set up an affiliate marketing program using affiliates and affiliate agreements and then finally the typical final step is to move into joint ventures with joint venture agreements and that's what this video is all about it should help you understand how to structure and set up your joint venture relationships and the clauses in your joint venture agreement and why they're important to you so let's get started with the video this video is provided for informational purposes only it doesn't constitute legal advice and it shouldn't be construed as legal advice it doesn't create an attorney-client relationship and we won't cover all of the possible requirements and issues only the typical ones and this video is copyrighted material no sharing is authorized some clauses are absolutely required in any JV agreement because they help you protect your interest and they also help you avoid joint and several liability which is a key issue in JV agreements involving internet informational products in this video I'll identify these clauses both in the affiliate and reseller models for JV agreements and I'll also explain why they're important to you I've talked to a lot of internet marketers about jayvees and I've discussed with them what they believe jayvees are and how they enter into JB's and I'm a little surprised at their lack of understanding about what a JV really is most of them think well it's just a handshake deal where me for example that has a an information product finds a partner so to speak that's got a big list and we decide on a handshake that the list provider will simply promote my product possibly in and to the list and then we'll share the proceeds and that's about all there is to it I maintain that there's really more to jayvees than that and at the end of this video hopefully you'll know a lot more about jv's how to structure them to take advantage of different business opportunities and how to avoid or at least take the steps to avoid joining several liability ok what's the definition of a JV a JV is a strategic alliance involving two or more people or organizations for a joint business enterprise for a particular purpose and for a particular period of time and jayvees assist you with your sales as intermediaries and because they're intermediaries we refer to jayvees as in direct sales channels there are two important models for structuring jayvees one is the affiliate model which is the typical one and then the other is the reseller model and we'll talk about both in the video okay so let's take a look at the typical affiliate model structure for a JV and this is the typical model that we see we have a seller with an informational product and the seller appoints a list provider who has a big attractive list the list provider promotes the JV offer which is the sellers informational product to the list providers list and it's important to note that the purchasers purchased directly from the seller of the informational product and then the seller pays back a commission to the list provider for the promotional efforts of the list provider and generally this is usually 50% now if you think through this structure a little bit and its ramifications you'll see that there is a significant amount of control by the seller the control of the product the pricing Shopping Cart the affiliate tracking mechanism reporting cash flow and lists transfer meaning that the purchasers are transferred to the sellers list now let's take a look at a different model for structuring jv's that would be the reseller model on the Left we see the diagram that we just disgust for the affiliate model on the right is the diagram for the JV model and here again we have the seller of the informational product but in this model the seller grants resale rights to the list provider and then the list provider enters into purchase and sale transaction with the purchasers collects the revenue from the sale and then remits a revenue share back to the seller with the result being a significant shift in control from the seller in the affiliate model to the reseller in the reseller model and all of those elements that we talked about a minute ago shift product including the possibility of bundling pricing shopping cart sales tracking reporting cash flow and list transfer if there's a transfer at all meaning that the purchasers are on the list providers list and the only way that they can end up on the sellers list is through actual transfer of the names and email addresses and this is usually a point of negotiation in structuring the deal so now that we have an understanding of the differences in structure between the affiliate model and reseller model jayvees let's take a look at the key clauses in these agreements that are very significant to you number one how the agreement is presented with a traditional presentation which is essentially paper-based documents are negotiated drafted email back and forth his email attachments and then when the final agreement is reached the final document is actually signed with pen to paper but there's another way of presenting an agreement and that is taking advantage of the e-sign act this provides a very efficient way to do transactions because under the e-sign act a printed signature in an email for example has the same validity as an actual physical signed and it's important to know that when I designed the 2jv agreements in our system I wanted to try to make them as close as possible to the typical handshake JV so I designed them with an e sign Act presentation which goes as follows there there's an initial presentation by email the negotiations go back and forth by email and then there's acceptance by email reply with printed signatures all of this makes the presentation the negotiation and the acceptance of this agreement very very efficient and similar to a handshake deal in some respects key clause number two the description of the product or service and the list this is always an important element of any contract and it needs to be documented regarding the product or service the rule of thumb is if it would be important to a purchaser then it should be described in the agreement and not only the exact product itself but additional features and services that might support it such as a money-back guarantee also free tech support and regarding the list the rule of thumb is if it would be important for conversions then describe it for example you should know the number of subscribers and if the list provider has outsourced to an email and autoresponder service such as Aweber or Constant Contact that should be noted as well and finally if the list has a certain field of interest that should also be documented so it's very important that the parties document the key deliverable of each one for the seller that would be the product or service and then any follow-on or supporting services and then for the list provider the composition of the list key Clause 3 description of the offer this is where we describe exactly what the offer will be to the purchasers it obviously includes a description of the product or service as we discussed in the prior slide but it also includes additional inducements such as price discounts off the list price and bonus offers so it's very important to describe the offer itself because this is the key to driving conversions and it should be documented key clause for marketing responsibilities and this is where jayvees done by a handshake really falls short in many respect the general understanding of course is the seller provides the product or and the list provider provides the list and some promotional efforts and that's about as far as it goes but there are other details that would be significant for the success of the JV and these should be documented such as who does the copy for the promotional emails the email schedule if there's a webinar or other presentation to present the offer who does the offer page and what about co-sponsorship responsibilities are there social media promotions are there online press releases and if so is there a budget are there online ads is there a budget and what about transaction processing and tracking of conversions how does that work how reliable is it and finally who's the contact person for warranty issues and returns all of these issues are extremely important to the success of a JV and for this reason they should be documented key Clause 5 contingencies very significant in any JV because these are items that each party should have satisfied or waived before the offer is presented for example the list provider may want to see a demo of the product or service before proceeding with the joint venture offer however if the list provider is familiar with the product and understands what it is and has had previous dealings with the seller this item can be waived and the copy for the promotional activities the party who is not providing the copy may want to review it to make sure that it would be persuasive and appropriate also the conversion tracking functionality there may be a need for an actual demo to convince the list provider that it actually works properly the size and composition of the lists and finally if there's a sales webinar that will present the offer this is usually prepared and presented by the seller and the list provider may want to see a video of past webinars or at least the PowerPoint slides for the webinar so because each of these items is so important each party may want demonstrations and satisfaction as to each of these items or if not they can certainly be waived key clause 6 the offer period how long is it when does it begin when does it end that would be the typical description of the offer period and sometimes in the JV agreement it's really not certain at the time the agreement has entered into exactly when the offer period begins and ends and so the JV agreement can simply say by mutual agreement in the future key clauses 7 actually a couple of related clauses revenue shares and payment terms there needs to be a definition of net revenues in the JV agreement because net revenues is the figure that the revenue share is based on the formula is typically gross revenues less returns in taxes equals net revenues and from the net revenue figure will then calculate the revenue share and payment terms are very significant and should also be documented the number of days after the offer period closes and the party making the payment which if you're in the affiliate model it'll be the seller and if you're in the reseller model it'll be the list provider at the time the payment is made there should be a summary of the conversions provided in written form and a calculation of the revenue share now we have an option in our document of providing audit rights for the party that is receiving the payment this is not always an issue that would be documented but it's certainly an option and if you're the receiving party it can help you determine for example if you've been shortchanged a little bit on the revenue share so revenue shares and related payment returns are extremely important and these terms should be documented key clauses 8 and this is a collection of clauses all dealing with limitations of liability there should always be a disclaimer of consequential damages that applies equally to both parties and typically you should expect to see a direct damages limitation limited to the revenue share that's payable or paid and our JV agreements have each of these clauses next we turn to the issue of joint and several liability joint and several liability means that each party individually could be held responsible legally for the debts or expenses of the overall JV and this is similar to the liability of a partner in a general partnership and because the laws of partnership are state laws not federal each state has its own laws but they're fairly similar from state to state and generally speaking each state has laws that provide for a sharing of profits and losses of a mutual undertaking which could include of course a JV and the sharing of profits and losses could lead to joint and several liability of the parties which is obviously something we want to avoid the question being how do we take steps to avoid joining several liability the recommended approach that we follow in our documents is a provision that states that each party bears its own expenses and the expenses may not be equal and this is a significant advantage of a JV in written form over a handshake JV because with a handshake JV it may appear essentially the profits and losses are shared so the written JV agreement that expressly provides that each party bears its own expenses and that they may not be equal will be a significant step to take to avoid this liability in summary then with this recommended approach we take steps to create what is known as individual profits and losses rather than joint profits and losses key Clause 9 confidentiality each participant in the JV may be engaged in a series of jayvees with other parties and these other parties could be competitors of the JV partner that's in the particular JV of the moment and for this and other reasons confidentiality obligations may be important to document for each party and that should usually cover the results of the JV in terms of conversions and sales you probably don't want that to be public knowledge or information and specific information about the product or service that's offered as a part of the JV so in conclusion JV agreements may actually turbocharged your internet marketing and take it to a new level and that could be very significant but to use jayvees effectively it's really important that you understand how to structure JV agreements and that would involve both the affiliate the reseller models the differences between these two models and how those differences can be used to take advantage of different opportunities the key clauses of each model and then finally the steps to take to avoid liability particularly joint in several liability this concludes the video thanks for your attention