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What is a management contract or management agreement?
Whether you’re transferring operational control of your business, outsourcing procurements, or just starting a construction project, reduce risk with a management agreement.
What is a management contract?
In a management contract, an individual owner, investor, or company hires a management company to operate part of their business, all of it, or just a specific project. The management company might be an accounting firm, project management company, property manager, or any other organization that can provide the desired services. With the contract, also known as a management agreement, the management company agrees to perform specific services.
In return for their services, the company receives a management fee stipulated in the contract. The fee might be a set sum agreed upon by both parties, or it can depend on the overall performance of the company.
Types of management services.
These are the most common types of services management teams perform.
Marketing services
Both large corporations and small businesses need to spread the word about their products, so they hire marketing experts to manage their marketing strategy and develop campaigns.
Finances, accounting, and investments
A startup may have few employees, but handling payroll is still time-consuming and requires expertise. Startups may also have to deal with tasks like contract management, software integrations, and other processes that require teams to be highly flexible. To deal with the challenges of payroll, a new company can hire an accounting firm to manage employee compensation.
Technical operations (production, construction, IT)
If a company needs to manufacture a new product or construct a new building, it’s better to hire a manufacturing or construction management firm than to try to develop that expertise in-house. The same holds for property management, and business owners often award hotel management contracts to experts in the hotel industry. A company might also hire specialty firms to identify and set up systems like contract management software, automation tools, or intranet systems that require technical expertise.
Human resources
Companies succeed in the long term only if they attract and retain good talent. Organizations can hire an agency that specializes in human resources management to find talent, ensure that employees keep growing and contributing to the company, and oversee tasks like the employment contract management process.
Information to include in any management contract.
Every management agreement includes three basic pieces of information.
Conditions
Who are the parties involved and what are the contract terms? This is where the parties spell out the details of the agreement. This section should cover the exact responsibilities of the management company, as well as the extent to which the contracting company has control over the management company’s operational decisions. This section may also include a nondisclosure agreement or confidentiality clause to ensure the security of proprietary information.
Time period
Management agreements can cover any length of time, from months to years, so it’s important to spell out the exact period of a particular agreement. The time period could depend on how the management company performs, with extensions (or early terminations) stipulated if the business meets (or fails to meet) certain milestones.
Details of compensation
As with any agreement, the contract should clearly spell out how the management company calculates its fees. Management companies can earn a percentage of profit or revenue, or they can charge a flat rate.
Complete management contracts fast.
Once you’ve found the right management partner and you’ve gotten good legal advice, get the contract signed fast with Adobe Acrobat Sign. As more businesses go fully paperless, they find that electronic documents and e-signatures speed up transactions and create smoother workflows. With Acrobat Sign, you can receive a notification as soon as a document is signed or needs to be signed, and you can review and e-sign from anywhere, on any device.
Acrobat Sign also makes it easier to process digital management contracts and keep everything on track. And you can create a contract template that you can use for all of your contract needs. With the right management contractor and the tools to come to a quick agreement, you can transform your management company’s knowledge and expertise into even greater success.
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