Very simply put, this is a contractual issue. Territory carve-outs, non-competes, lead/subordinate clauses and roles and responsibilities need to be addressed very early on in any relationship. Oftentimes, the difficult issues are not addressed or addressed too late.
How can we avoid competing against our JV partner on future deals?
We are entering into a JV agreement for a resort hotel development in Hawaii. One of the reasons that we are participating in the deal is because we are looking to gain knowledge from our partner who has a great deal of experience in resort development. It is our intention to take the lead on such deals around the world in the future. We have a tremendous respect for the GP and are looking to create an arrangement to avoid bumping up against each other in the future. What are some ways in which we can avoid future conflict with our partner?
The first thing to do is to have competent counsel/advisors. Virtually every venture agreement has certain non-compete provisions that are drafted to fit the needs of the co-venturers. I don't know how much of your future strategy that you have disclosed. Once you have an understanding of both of your goals, you can draft language that will be protective. Note, however, that the broader the restriction, the more likely that it can be successfully challenged in the future. Some restrictions are based on geography, some include the passage of time, but all must cover the specifics that are of concern.