Often, when you think you’ve got everything under control, that’s when everything goes out of hand instead. Instead of treading down the negative thought trail of thinking that you’ve failed, consider the possibility that you just need management assistance. This is why management companies exist—to lend you their expertise in management. Strike a beneficial partnership with them by using a reliable management agreement. A management agreement will help both you and a management agency develop an operational plan that works for your enterprise and brings out a promising future deal.
By definition, a management agreement exists between a business or enterprise and a separate entity that performs various managerial functions, namely but not limited to management of operations of a facility, its personnel, accounting, marketing, and training. This is relevant to industries that offer management services. It’s an agreement used to outline the contract terms about a company granting the management agency the power to man its business operations. The management company receives full responsibility for certain tasks to help run the process smoothly.
Do you have a money-making rental property that you’re having difficulty overseeing? Is it located far from your residence, and are you new to the business of dealing with tenant concerns? The questions above are among The Balance Small Business’ factors to consider if you need a property manager. If your answers are all affirmative, then you might really want to hire one. When you do, follow the steps below on how to make an efficient management agreement that you can use:
The terms and conditions are the main highlights of any business agreement types because it contains everything that the parties should perform during the set duration of their partnership. It clearly identifies every party involved and outlines all responsibilities and limitations they have towards one another. Because it’s a management agreement, it should include the extent of the management agency’s control over the client’s operations or properties. It should also draw the border of what tasks need the client’s supervision or approval and what are those left under the management agency’s decision.
An agreement can’t proceed towards approval without setting a specific timeline. Your business management agreement should have details on how long a client would allow operating management to handle their entrepreneurial affairs or their real estate leasing services, among others. This could stretch for years, but if it’s a short term business management contract, include options or conditions that would warrant a possible extension.
Even if you hope for a smooth-sailing management plan, anything is possible, which includes the possibility of encountering unfortunate incidents. To better prepare for these scenarios, including what will happen if any of the parties violate or breach the agreement’s terms and conditions. You should detail the different degrees of violations and the corresponding consequences, which could range from simply paying a fine to either a suspension or contract termination. This is also a way to impose discipline and to underline the importance of heeding their respective responsibilities.
There are numerous ways to compute the management fee. It could be a predetermined value or a certain percentage of an operation’s total revenue or profit. It’s essential to include this on your management services agreement to avoid misunderstandings with regard to the compensation matters. It’s unacceptable for any management company or client to enter into an agreement without clearing the payment terms. Aside from determining the fee’s computation, include the payment schedule as well.
They might be similar in the sense that both give up control to another party, but they are different. In a management agreement, the managing agency will work under the firm or entity that hired them to render their service. On the other hand, a franchising deal will operate as a separate business because the franchisor has bought the rights to operate a part of the brand with identical products and management style.
An effective management agreement has the following:
Yes, it’s legally binding as it meets all the criteria of an enforceable agreement.
Management is never an easy burden, regardless if it’s overseeing personnel performance, store operation, or supervising rental properties. It’s a burden that needs the expertise of the people who specialize in management. There’s nothing wrong with wanting to manage your own resources, but instead of single-handedly taking care of your business when you have very little knowledge of how they work, a management consultant wouldn’t hurt. To ensure that you’re making a deal with the right terms, get a management agreement template from any of our collections. They all vary according to different purposes. Download now!