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Management Agreement Template
What Is a Management Agreement?
A Management Agreement is a legal document that allows one company to manage and fulfill the full operations of another business, for a set amount of time, agreed by both parties. Usually, the owner of a business will sign such agreements directly with a management company. In return, the management company receives a compensation package, as agreed upon in the Management Agreement. Such agreements are often concentrated on carrying out specific tasks, not so much on the end result.
Alternate Names:
- Management Contract;
- Management Agreement Contract.
There are many things to consider when forming a contract, which is why we recommend downloading a ready-made Management Agreement template through the link below.
The main advantage of signing a Management Agreement is that it gives owners more time to think about and work on expanding a business, rather than spending time on everyday issues associated with running a business, making the business run more efficiently. It also gives owners the opportunity to hire an expert manager within the management company - which will bring a vast amount of experience and knowledge.
How to Write a Management Contract?
There are four core components that need to be considered and included in every Management Contract:
- Agreement on responsibilities. The contract must accurately and in detail reflect the agreements made by both parties in respect to each other. It must clearly state the parties involved and the specific operational tasks that are being transferred over to the chosen management company. This section should cover as much detail as possible to show clarity and prevent any future disputes or uncertainty.
- The time period of contract validity. This part of the contract must outline the time period for which the management company will effectively be managing a business. This time period will vary depending on the requirements of the business and there may often be certain conditions for the agreed time period, often based on the fulfillment of agreed obligations.
- Compensation package. It is important to write in detail the compensation package for the management company. This section should clearly state the sum of payment for their work and also how often the company will be paid. Different businesses go about this in different ways. Some offer a fixed price whilst others make a percentage-based agreement, based on the performance of the management company. A lot of business owners often initially propose a "trial period" during the formation of such an agreement. If this is obligatory, a clause on this must also be included in the contract.
- Contract suspension. In the event that the business owner deems the work of the management company unsatisfactory, or vice versa, it is vital that this information is also included in the contract. Not only should these conditions be outlined, but the result of such breaches and financial compensation should also be clearly stated.
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