Management Agreements: Here’s What You Need to Know
Imagine for a moment you’ve invested most of your life savings into a business; perhaps you invested in a hotel or a multi-family property. You’ve done your best to juggle the management of this investment, your daily life responsibilities, and pursuing future business opportunities.
After all thi
What is a Management Agreement?A management agreement is a contract between parties (the owner and the management company), which typically spells out the expected services, a list of responsibilities, the administration, and management of services provided, and the compensation for these services. The contract should also include provisions for renewal, termination, and dispute resolution.
Types of Management Agreements1. Management services – usually between a company and a consultant or independent contractor
2. Construction management agreements – a contract between the property owner and the construction company or foreman
3.Developer management agreements – agreements made between landowner and developers
4.Commercial management agreements – a contract between a commercial property owner and a commercial management company or person hired to manage a commercial property
5.Technical management agreements – agreements usually between owners and shipping companies to have products shipped
6.Property management agreements – a contract between a property owner and the person or company hired to manage the property
7.Investment management agreements – an agreement between an investor and an investment advisor
Types of Businesses or Industries That Need Management AgreementsHotels and Motels
Multi-family property landlords or owners
Commercial landlords or owners
Companies who hire independent contractors
Bars and nightclubs
Adult entertainment establishments
What Should A Management Agreement IncludeWe advise that you consult with an experienced attorney regarding your specific business to address your specific needs, but these are a few of the areas you may want to address in your management agreement.
How to renew or terminate the contract
Identify conflicts of interest
Why You Need a Management AgreementIf you own a business or property and you feel you need someone else to manage it, or perhaps you need to hire independent contractors to help you with your company, then we advise our clients to secure a management agreement.
Many of the most successful people know how to delegate and know how to surround themselves with the right people for the job. Hiring a management service to run your business may be the right business decision but the responsibilities and terms must be clear.
Here are just a few of the more common reasons why many business owners or investors hire a management service or independent contractor:
To take care of selection, promotion, and supervision of staff and employees
To negotiate basic leasing and concession arrangements, including equipment leases and service leases, with owner’s approval if required
To obtain and maintain necessary licenses and permits required by laws, statutes, and ordinances
To submit a budget for the day-to-day operations and capital expenditures for review
To maintain adequate supplies, inventory, and equipment necessary for the day-to-day operations of the business
To manage the advertisement and promotion of the business
If your business is a franchise, to oversee compliance with the terms of any franchise agreement
To maintain records and proper accounting
To oversee appropriate insurance coverage
To manage any construction