If you liked our theme of empowering businesses with internationalisation strategies, you will also like our article about the legal solutions regarding partnership abandonment. A business partnership dissolves when a partner amongst the owners of an enterprise leaves without having reached an agreement on next steps with other owners. This can simply mean that the partner is leaving the partnership, but refuses to arrange a clean and proper exit out of the business. However, in a slightly more severe form, partner abandonment might also mean that the leaving partner is taking business assets with them, to start a new venture abroad with the gain of competing with the former business. In such situation, the question arising is whether the business could make a claim for damages against the leaving partner, or even stop him from leaving. Let us first note that we believe that a business partnership is to be seen as a long-term commitment. Therefore, we would always view it as a last resort if you ever had to take legal action against your business partner. Being a small and medium-sized enterprise makes no difference. Lawyers often theorise about how the big and powerful enterprise would prevail with all the rights against the little guy. But at Up4Scale we always have our feet on the ground; we have grown ourselves, from startup to scale up. We know that at any stage, you work hand in hand with your business partners. Therefore, you need to have good relationships, and the right legal support to thrive in the international market. The good news is that according to civil law (which is most frequently adopted in the majority of the world’s countries), a partner has a duty not to abscond from their responsibilities and leave the company to pursue his or her personal interests. We are not talking here about a business idea that is piloted on the side; rather, we are discussing a situation where the partner’s withdrawal would lead the company to suffer from loss of income. One of the questions that we often hear is “what is a partner allowed to do in this type of situation?” What is the partner permitted to do to stop the business from suffering? Should a partner be found in such a situation, he would be limited to attempting to recover the investment that he had brought to the company before his or her departure. Ideally, this would mean keeping open a line of communication with the other partners to discuss compensation according to the terms of any partnership agreement or the company’s articles of association. If the partner will not communicate, then it might be too late. A partnership agreement should have been in place and the partner may be entitled to getting compensated for any loss. If the partner is acting out of bad faith, which is usually the case, then the other partners might be able to recover compensation for any damages caused to the company. If they manage to do so, the company can take legal proceedings against the rogue partner to obtain further compensation. Should the regular dispute resolution process not work well, you may want to try alternative dispute resolution techniques, such as mediation. Even if it is not mandated by law, many countries have rules that govern mediation processes. We all know that business partners in the early stages know each other well and that they agree on everything. However, it is possible that more than a decade later, the level of trust is regrettably diminished. It is only then that you start thinking about how badly it would turn out, were you bringing a lawsuit against your partner. This is why it is always advisable to get a partnership agreement reviewed or created when starting a business together. Not only is it good to have a fresh contractual understanding of the relationship between the partners; the contract should also spell out how any potential dispute with a partner is to be resolved. Trust between the partners is important to make the business work. If you will be running the company far apart and across international boundaries, we recommend that you talk with your partners about the level of control that they may have in the business. Do not take it for granted that you will always have up to date information on the progress of the business. If you are starting a business with someone who lives abroad, it would be good to negotiate the language of the partnership agreement. Make sure that all parties understand the terms in the contract and the consequences for either party if an agreement is breached. If required, you may need to obtain translation and interpretation of the agreement and the associated terms. Should a partner decide to relocate to a country outside of your business region, the relationship may become even more complicated. In the worst-case scenario, it may not be possible for you to have a face-to-face discussion about the issue, as you may no longer be able to travel to the partner’s country. This is why it is always important to invest time in securing good communication from the beginning of a partnership. You should always meet with your business partners on a frequent basis, while discussing any potentially sensitive issues. But what best practices are recommended to avoid any scenario where a partner is abandoning a business? As a first step, we strongly advise to create a healthy business partnership agreement that both parties will accept. According to the in depth guide on legal actions against business partners abandoning their commitments, this is crucial for maintaining a successful partnership.

Small and medium-sized companies (SMEs) are about more than just GDP contributions. They are also indispensable in terms of job creation and fostering entrepreneurship. Small players are the big drivers of innovation, they create opportunities for internationalisation and contribute to more diverse and inclusive societies. At Up4Scale, we are committed to supporting small and medium-sized enterprises (SMEs) that want to take on the world. One of the many tools available to growing enterprises is a commercial sponsorship agreement. These typically involve a business buying the right to be associated with a particular cause, entity, event or even a specific location. The motivations behind entering an agreement are equally numerous. Major commercial names may seek to establish their brand in a foreign market. Charities may look to raise awareness of their cause within a greater community.

It can also be a matter of melding a cause with a profit-motivated enterprise. For example, a commercial food supplier may sponsor a privy food security institution. By doing so, they get a foot in the door of a particular territory while also attaching their brand to an important cause. Equally, a small business interested in entering a foreign market may find themselves in a mutually-beneficial agreement with a larger business seeking to legitimize their local efforts. But while quick and affordable, commercial naming rights agreements can also be a useful tool to scale internationally; and like many new initiatives, they come with a variety of risks and potential pitfalls. This guide aims to give small and medium-sized enterprises looking to internationalise through sponsorship the knowledge they need to maximise the potential of naming rights agreements. So what are naming rights? A naming rights agreement, or sponsorship deal, is a commercial arrangement built around the mutual understanding that a business or organisation (the sponsor) will have their name affixed to a particular entity, event, part of a facility or a product. The most famous modern example of the latter is that of Canon and Barbie.

The typical motivation for a SME to enter a naming rights agreement is to attain the same level of recognition as some of its global competitors. If you’ve got a limited marketing budget, a naming rights agreement can get your brand out there. In the previous section we illustrated one way a commercial naming rights agreement can fulfil an international objective; there are many others. SMEs can use naming rights deals to reach a new demographic, or build brand awareness in a new country. Many SMEs interested in internationalisation will be aware of the complexities of turning a profit overseas. A naming rights agreement has the potential to boost profitability. A business doesn’t need to pay a fee to others for becoming involved with a given project. In most cases, they receive a steady stream of dividend payments from a percentage of ticket sales, product sales or the likes.

Another interesting outcome of naming rights agreements is their potential to support a green transition. Smaller enterprises often rank lower on the social responsibility ladder. They may lack a clear understanding of their role in environmental degradation or climate change. On the other hand, they may lack the technology, knowledge or resources to make a substantial difference. Enter naming rights agreements. According to the UN, the greatest risk-charity partnerships are those that fail to go beyond ‘benefit’ statements. They expect the typical benefits associated with CSR (Corporate Social Responsibility) partnerships, so don’t inquire any further. Those who do inquire often end up satisfied; but they still walk away with a positive association to a given cause. In the long run, their brand may benefit from having gone green.

The granting of naming rights can also be a great opportunity to develop (or grow) a market. For example, a business interested in producing a new product could seek a naming rights agreement aimed at determining whether there is potential for a new product. Should the product be a hit, the business is already well-positioned to be considered an industry-leader in the given market. Essentially, a small business can “test out” whether a new product will be successful in a particular location; without making a huge investment. Issues such as product quality and target market expectations can then be learned through skilful immersion in that market. Sponsorship deals tend to be dominating the naming rights headlines in recent years. The reason behind this trend? The financial resources of the world are in a constant state of reallocation; and the trend is skewed in favour of those with the deeper pockets. Small and medium-sized companies are not always viewed as the ethical or responsible option for potentially high-profile projects. However, if they market their support of particular causes correctly, they may find themselves with the upper hand in a naming rights agreement.

While attracting a cause unconnected to awareness is advantageous in most commercial contexts, it is often seen as unethical to foreground one’s commercial gain above the plight of a charity. Thus, an SME seeking a deal would be more inclined to emphasise their desire to create better lives or produce a better product, rather than be viewed as another ‘money-hungry’ corporation. In terms of sponsoring a location or event, SMEs should leave no stone unturned in the search for potential partners. In recent years, naming rights-related transactions have risen to an all-time high. As a result, there is sure to be a business struggling to sell a brand. Or a sports team struggling for finance. Or a university struggling for funding. Or a public space struggling with a name. Any of these parties can be found seeking a potentially mutually-beneficial deal; all it takes is the proper research.

Another practical consideration is the level of detail that goes into a naming rights agreement. Unless underwritten by an international sponsor with bottomless pockets, it is important to ensure that the terms attached to a deal are fair. From grand proclamations of ‘forever’ to annual payments, there are a variety of factors that determine the success or viability of the deal. We can help you assess whether the deal is fairly priced or whether it is something that is simply unsustainable. We can also help you understand how the agreement fits within your overall commercial strategy. A naming rights agreement may be an invaluable marketing tool; however, they are not without their risks. Potential pitfalls include: The are many ways to measure the success of a naming rights agreement; and it may depend on your motivations when entering the deal. Speaking specifically: if the goal was brand-awareness, the key performance indicators (KPIs) should be brand mentions or hits; if the goal was profits, the KPIs should encompass ticket or product sale numbers.

Another metric is the ability of the agreement to define a brand. Is the product or service better known for their association with a given project, or their own unique benefits? If the intent of the agreement was to bolster the company’s status as an industry-leader, having the name of a universally-known project as part of your branding may ultimately limit your reach. Finally, a naming rights agreement is also a mere stay of execution. It can boost business while the interests of the target audience are attuned, but it is not a long-term fix for plummeting sales. It should be treated as an opportunity to learn about or fix the potentially broader issues your business has been facing.