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RETAIL By Demetrius Carney, Joseph McCoy, & Sid Bale, Perkins Coie or that the ACDBE partner is partici- the landscape of historical joint venture pating in the front scheme. structure and operation. The regulations STRUCTURING A The prime and the ACDBE must exercise control in proportion to its ownership interest. Control is gener- increased benchmarks for participation by disadvantage business owners. This participation is one of the factors con- JOINT VENTURE ally demonstrated and exercised by membership and voting power on management committees. The joint venture agreement or operating sidered by airport authorities when RFP submissions are evaluated. Among other provisions, FAA restricted a prime’s ability to capture Attorneys offer advice for those considering agreement should clearly address the responsibility for each management the profits and interests of their JV partner through layered multiple teaming up for concessions contracts committee, the partners participating on the committee, and most impor- management and administrative fees or specified mandated control tar- Anxious to meet the deadline to the Airport Authority’s request for propos- tantly the voting structure for the gets; and it provided guidance on the committee. management responsibilities of both als (RFP) for a concession operation, a prime concession operator and its The management committee may JV partners. politically correct airport concession disadvantaged business enterprise designate an operations manager to To ensure compliance with fed- (ACDBE) partner quickly agree to respond to the RFP as a joint venture run the company’s day to day affairs. eral guidelines, FAA began auditing (JV). The partners execute a basic joint venture agreement; and agree that However, all major decisions should concession JV relationships. Federal be the responsibility of the primary authorities are not the only agencies they will work out the details of the JV if their proposal is accepted. Big management committee. It might monitoring such joint venture rela- mistake. This scenario lays the foundation for decertification of the ACDBE, serve the partners well to establish an tionships — airport authorities now debarment of the JV, investigation of the JV by the local airport authority, organizational chart as an exhibit to review the three primary aspects of any and possible indictment by the feds. Let’s start over. the JV agreement. The organization- JV arrangement prior to any award, al chart should clearly delineate the renewal, extension, or material amend- Responding to a concessions to simply include a disadvantaged responsibility of each partner, identify ment to a concession agreement. operation RFP as a JV requires plan- business as a passive partner will not each partners’ participation on each Because the burden will always be ning as to 1) the selection of the right survive the scrutiny of an audit by the on the venture to demonstrate com- business partners; 2) all the business airport authority or regulatory agency. pliance with any and all FAA regula- aspects for operation of a profitable The first step in structuring a JV Authorities now review the tions, JV airport concessionaires do and successful airport concession; and is to have the venture properly capital-
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