Partnership Structure for Regional Expansion
October 24, 2025
by a searcher from California State University, Chico in Sonoma County, CA, USA
I’m working on a deal that would give me exclusive rights for a regional rollout of an existing business.
I’m partnering with the founder of a company that has a proven product. His responsibility is training me on the business model and providing the product, my responsibility is launching the venture in CA and handling all funding and operating requirements, similar to a franchise structure. He wants a non-compete so I can’t learn his process and replicate it, but my attorney says non-competes are basically unenforceable in California and even if they were, it doesn't make sense in this scenario because there are no trade secrets and it could create issues for me later.
My attorney suggested forming a joint LLC with both of us owning equity in the new business, with clear terms for the partnership length, revenue share, and how to shut down the venture, if necessary. This would naturally act as a non-compete during the life of the business by not allowing either of us to operate a similar business during the life of our agreement.
The founder prefers a royalty/license model but still wants some protection of his “secret sauce”, and not allow me to take his product into other states under a different name.
Has anyone structured a hybrid license/JV that protects the licensor’s believed to be IP in CA? Again, this is essentially a start up business with no real patent or trademark. It is simply someone who has spent a large amount of time "perfecting" a business process and does not want me to compete with him under a different entity in the future.
Any thoughts would be hugely helpful!
from American University in Irvine, CA, USA
from California State University, Chico in Sonoma County, CA, USA