A person or a group of persons who want to start a new business should have at least 3 years of prior business experience in the business he/she/they want to pursue. It is recommended that interested entrepreneurs pursue nationally recognized name brand service facilities. For example gas & service stations (EXXONMOBILE, ARCO, CITGO), KFC Restaurants (LARIBA.com financed KFC stores in California that offer Halal Zabiha Kentucky Fried Chicken), medical and dental facilities.

There are two approaches:

Joint Venture:

The model used is a Joint Venture (musharaka) model. Here the business owner enters an agreement with the Islamic Financial company to buy the business according to a certain ownership distribution.

The operator agrees to operate the business for a fee. The profit is distributed between the two entities according to an agreed upon formula.

The operator may include in the agreement his/her right to purchase the business after a certain period and according to a specific formula.

Joint Venture Lease-To-Purchase:

The model used is same as that above in item number one. Here the operator opts to buy back the shares of the company back at cost over a period.

The lease rate of such a business is evaluated professionally by both parties. They agree to the monthly lease rate.

The monthly payment is calculated based on the same principles used in the Lease-To-Purchase (LTP) agreement explained in Home Financing.

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