A guide to creating a joint venture consortium

Getting approval

Approval comes in two stages, the initial approval is conceptual, and is based upon a draft of a partnership offer document. The second is in more detail when you need to be able to demonstrate that you can make this vision become a reality, and have the final offer proposal and details of exactly what is included.

Initial approval

For initial approval you are laying out its purpose, what you envisage will be included, and the estimated cost of entry, together with a time scale for your development. 

There is no fee involved in making a single application for initial approval, but if you want to develop a number at the same time, then after the first you will be asked for an application fee and bond. This is to cover looking at your proposals and a bond as surety that you will deliver.  These both start low and increase compared with the number of applications that  you have outstanding and not reached final approval stage.  This is designed to stop people from listing very many options, just to stop others from developing these ideas, before they have got around to them. Once you have an idea developed to final approval, then you can submit another for initial approval again without charge. 

There are a number of tests that are applied to all applications, these include the value for money test, and a test, that there is sufficient for the partners to do, that the chance of success is high, that you are developing it to a stage where there is a positive advantage to consortium members, that the business is a real one and that is does not overlap excessively with some other projects already announced or where initial approval has already been granted.

Once you have approval, which is valid for a set time, usually slightly longer than the time you estimated was to be your development time, they will say if this project qualifies as one where limited overlap will be allowed or not. Very broad restrictions are not allowed, so the definition of your project has to be quite well defined.

Detailed approval

Detailed approval is based upon the same basic grounds as the initial approval, and providing you are proposing the same deal, with the same costs and you have developed it as you said, within the time you estimated. then this is basically a formality.

In most cases however you will have decided on some changes, perhaps the number of partners or what is included, and this may not be substantially different, you might for example have included more within the same package. A decision will be made as to if the changes are minor and then only these looked at in detail or if the changes are substantial and the whole project needs to be reviewed as if it was a  fresh application.

Additionally at this stage you will need to explain how the opportunities are to be marketed, costs involved and what funds on receipt eventually end up where. 

You will also have to show how the consortium links into the systems used by all consortiums etc, the easiest way to do this is with a Business Club International gateway.

At this point a consultant will also be asked to check out the proposal you are making and you will need to meet with them and be able to demonstrate that you can deliver that which you are offering. They will not want to go into every aspect in detail but may select to look as some areas with you in detail. They are looking to see that you have the knowledge and can transfer this to partners to empower them to run the operation you have packaged.

Read the information sections of the exchange website, www.property-club.org to see if any additional information is shown and re read this site fully. Shortly a definition is to be produced that you will be able to print out that defines this all more clearly.  The hold up on this has been the desire not to be too formulaic, and to look at all proposals as they stand, but also to make sure that the basics are checked to look after the interests of those participating. One proposal being further developed at this time is a guide document, so it does not define the criteria for approval but instead provides a guide to the information that should be included and the sort of arrangements that will be approved. 

Gaining approval is unlikely to be a problem, it is more likely that you will be asked to modify some aspects or complete more work to get it. The overriding philosophy on approval is to safeguard the interests of those participating, not to put obstacles in your way as a packager. 

The main doorway site and exchange site for Property Club International is at www.property-club.org  
You may also like to visit www.property-club-international.org, it  contains a series
  of articles on joint venture consortiums and the organization behind them.