"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.

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How to Write a Management Contract?

There are four core components that need to be considered and included in every Management Contract:

  1. 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.
  2. 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.
  3. 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.
  4. 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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Management Agreement
This Management Agreement (hereinafter referred to as the “Agreement”) is entered
into as of _________________, by and between _________________________, with
a mailing address of ____________________________________________________
_______________________________ (hereinafter referred to as the “Company”) and
_________________________, with a mailing address of_______________________
_______________________ (hereinafter referred to as the “Manager”), collectively
referred to as the “Parties,” both of whom agree to be bound by this Agreement.
WHEREAS the Company is in the business of operating a ________________
______________ (hereinafter referred to as the “Business”);
WHEREAS the Manager has knowledge and expertise in the area of
establishing, developing, operating and managing _________________, as well
as in the area of the management of enterprises carrying on activities similar to
those of the Company;
WHEREAS the Company considers that the Manager’s expertise will enable
the Company to successfully and profitably operate its Business;
WHEREAS the Manager has represented to the Company that it shall, during
the term of this Agreement, be primarily responsible for the performance of the
services to be provided hereunder;
WHEREAS the Company wishes to engage the Manager to manage the
Business on the terms and conditions set out below, and the Manager is
prepared to enter into the present Agreement with the Company.
Now, therefore, the parties agree as follows:
1. Engagement. The Company hereby engages the Manager to provide expertise in
the operation of the Business and such management services as may, from time to
time, be requested by the Company. Such services shall be provided by the Manager
and through such other agents and supervisors employed by the Manager as may be
named by the Manager.
2. Terms and Renewal. This Agreement shall run for _________ months from the
date of the opening for business of the Business, unless sooner terminated or
subsequently continued in accordance with the terms and conditions of the present
Agreement.
The Company may, at its option, renew the present Agreement for an additional
period of _________ months, provided that at the end of the initial term:
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Management Agreement
This Management Agreement (hereinafter referred to as the “Agreement”) is entered
into as of _________________, by and between _________________________, with
a mailing address of ____________________________________________________
_______________________________ (hereinafter referred to as the “Company”) and
_________________________, with a mailing address of_______________________
_______________________ (hereinafter referred to as the “Manager”), collectively
referred to as the “Parties,” both of whom agree to be bound by this Agreement.
WHEREAS the Company is in the business of operating a ________________
______________ (hereinafter referred to as the “Business”);
WHEREAS the Manager has knowledge and expertise in the area of
establishing, developing, operating and managing _________________, as well
as in the area of the management of enterprises carrying on activities similar to
those of the Company;
WHEREAS the Company considers that the Manager’s expertise will enable
the Company to successfully and profitably operate its Business;
WHEREAS the Manager has represented to the Company that it shall, during
the term of this Agreement, be primarily responsible for the performance of the
services to be provided hereunder;
WHEREAS the Company wishes to engage the Manager to manage the
Business on the terms and conditions set out below, and the Manager is
prepared to enter into the present Agreement with the Company.
Now, therefore, the parties agree as follows:
1. Engagement. The Company hereby engages the Manager to provide expertise in
the operation of the Business and such management services as may, from time to
time, be requested by the Company. Such services shall be provided by the Manager
and through such other agents and supervisors employed by the Manager as may be
named by the Manager.
2. Terms and Renewal. This Agreement shall run for _________ months from the
date of the opening for business of the Business, unless sooner terminated or
subsequently continued in accordance with the terms and conditions of the present
Agreement.
The Company may, at its option, renew the present Agreement for an additional
period of _________ months, provided that at the end of the initial term:
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● The Company has given the Manager written notice of such election to renew
not less than _________ months and not more than _________ months prior to
the expiry of the initial term;
● The Company has satisfied all monetary obligations owed by it to the Manager,
and has timely met such obligations throughout the term of the present
Agreement;
● The Company shall execute not less than _________ months prior to renewal
the Manager’s then-current form of Agreement, which Agreement shall
supersede in all respects the present Agreement, and the terms of which may
differ from the terms of the present Agreement, including, without limitation, a
revised Management Fee;
● The Company shall execute a general release, in a form prescribed by the
Manager, of any and all claims against the Manager and its subsidiaries and
affiliates, if any, and in respect of their respective officers, directors, agents and
employees.
3. Fees and Payments. The Company shall pay to the Manager during the terms of
this Agreement a fee for its management services in an amount equal to _________%
of the Gross Sales at the Business (hereinafter referred to as the “Management Fee”),
which Management Fee shall be payable monthly in arrears.
The term “Gross Sales” as used herein shall include the aggregate of the total amount
of all sales, receipts, receivables, sales of merchandise made or services rendered in,
at, on, or from the Business, and sales wherever made of food, beverage, and products
stored on the Business’s premises, including catering on and off the Business’s
premises, or any other business conducted from the Business, whether made by the
Company or any assignee, successor or sub-lessee, and whether made on a cash basis,
or by check, or on credit, paid or unpaid, collected or uncollected, including deposits
not refunded to customers, and the amount of any orders received at or solicited from
the Business although such orders may be filled elsewhere, in the same manner, and
with the same effect as if such sales or services have been made or performed on the
Business premises. Each charge or sale upon credit shall be treated as a sale for the
full price in the week during which such charge or sale shall be made, irrespective of
the time when the Company shall receive payment, either full or partial, therefor. Any
installation fee, continuing rental, or percentage sales, or any other revenue received
by the Franchisee from vending and other machines and public telephone permitted to
be installed on the Business’s premises under Section 5.6 hereof shall form part of
Gross Sales.
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The term “Gross Sales” as used herein shall not, however, include, or there shall be
deducted therefrom, as the case may be the following amounts: the amount of all sales
for which cash has been refunded, but only to the extent of such refund, provided that
the amount of such sales shall have previously been included in Gross Sales; the
amount of any gratuities to employees; the amount of any sales, retail, excise, or
similar tax imposed by any federal, provincial, municipal or other governmental
authority directly on sales or services and added to the price thereof, where such
amounts have been collected from the customer at the point of sale by the Company
acting as agent for such authority and actually in turn paid by the Company to such
governmental authority; the amount of any promotional discounts approved by the
Franchisor, including, without limitation, coupon redemptions and other sales of food
pursuant to promotional programs which have been approved in writing by the
Franchisor prior to implementation; meals served to employees of the Company and
consumed on the Business’s premises, provided an accurate list of such meals
consumed is reported on the weekly report required by Section 4.3 hereinabove.
The Manager shall be reimbursed for all traveling and other expenses actually and
properly incurred by it in connection with its duties hereunder. The Manager shall
furnish statements and vouchers to the Company in respect of all such expenses for
which reimbursement is claimed.
All monthly payments required by this Article 3 must be paid by check drawn to the
order of the Manager and received by the Manager at its address designated in
sub-section 9.1.1 hereof, by _________________ on the _________________
immediately following the close of each monthly period, accompanied by a written
report detailing the calculations of the Company’s Gross Sales at the Business for each
such monthly period. If any payment is overdue, the Company shall pay to the
Manager, in addition to the overdue amount, interest on such amount from the date it
was due until the date of payment, at the rate of _________% per annum, and
entitlement to such interest shall be in addition to any other remedies which the
Manager may have.
4. Authority, Power, Obligations, and Responsibilities of the Manager. The
Manager shall have full power and authority to manage the Business on behalf of the
Company during the terms of the present Agreement.
For greater certainty, the Manager’s authority, powers, duties, and responsibilities
hereunder towards the Company shall include:
● The recruitment, employment, and dismissal of all employees of the Company
working in the Business;
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● Entering into the usual contracts necessary for carrying on the business of the
Company in the ordinary course, including, without limitation, the authority to
order goods, materials, supplies, and products required for the business of the
Company;
● The promotion, marketing, and advertisement of the Company pursuant to the
Franchise Agreement entered into between the Company and the Franchisor;
● Entering into any contract on behalf of the Company for the repair,
maintenance, or improvement of the Business pursuant to the Franchise
Agreement entered into between the Company and the Franchisor;
● Preparing or having prepared all accounting and other records and reports
required to be prepared and remitted to the Franchisor under the Franchise
Agreement between the Franchisor and the Company.
It is understood and acknowledged and agreed to by the parties, that this Agreement is
not exclusive, and that the Manager may act as the manager of other individuals,
persons, corporations, partnerships, or other legal entities operating other restaurants
under franchise from the Franchisor.
It is understood, acknowledged, and agreed by the Company that the Manager has
made no waiver, warranty, or guarantee whatsoever upon which the Company may
rely, including any warranty or guarantee as to the profitability of the operation of the
Business during the term of this Agreement or any extension or renewal thereof.
5. Default and Termination. The Company shall be deemed to be in default under
this Agreement upon the occurrence of any of the following events:
● If the Company shall become insolvent, or bankrupt, or subject to the
provisions of the Winding-Up Act _________________ or the Bankruptcy Act
_________________, or shall go into liquidation, either voluntarily or under an
order of a Court of competent jurisdiction, or shall make a general assignment
for the benefit of its creditors, or otherwise acknowledge its insolvency;
● If a liquidator or liquidators or receiver or receivers or a trustee or trustees in
bankruptcy, be appointed to the Company, or if its secured creditors take
possession of the property of the Company or any substantial or essential part
thereof in the sole determination of the Manager;
● If the Company ceases to do business for any reason at the Business Premises
or loses the right to possession of the said premises for any reason, or otherwise
forfeits the right to do or transact business in the jurisdiction where the
Business is located;
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● If the Company fails, refuses, or neglects to promptly pay any monies owing to
the Manager when due under this Agreement.
The Manager shall be deemed to be in default under this Agreement upon the
occurrence of any of the following events:
● If the Manager shall become insolvent, or bankrupt, or subject to the provisions
of the Winding-Up Act _________________ or the Bankruptcy Act
_________________, or shall go into liquidation, either voluntarily or under an
order of a Court of competent jurisdiction, or shall make a general assignment
for the benefit of its creditors, or otherwise acknowledge its insolvency;
● If a liquidator or liquidators or receiver or receivers or a trustee or trustees in
bankruptcy, be appointed to the Manager, or if its secured creditors take
possession of the property of the Manager or any substantial or essential part
thereof;
● If the Manager ceases to do business for any reason or forfeits the right to do or
transact business in the jurisdiction where the Business is located;
● If the Manager fails, refuses, or neglects to promptly perform any obligations
owing to the Company when due under this Agreement.
Upon the occurrence of any event of default outlined in Section 5.1 or 5.2
hereinabove, the party not in default shall be entitled, at its option, to immediately
terminate the present Agreement.
6. Relationship of the Parties and Indemnification. It is understood and agreed to
and acknowledged by the Parties hereto that this Agreement does not create any
fiduciary relationship between them, and that nothing in this Agreement is intended to,
nor shall it be construed to, constitute either party a partner or joint venturer of the
other, or to create any commercial or other partnership between the Parties hereto.
The Company undertakes to hold the Manager harmless from any liability under any
contract entered into with any third party within the scope of the Manager’s authority
and powers hereunder and to reimburse the Manager the amount of any expense
which the Manager may make or incur in connection with such contracts.
The Company further undertakes to indemnify and hold harmless the Manager from
any claim made by any person for any relief whatsoever arising out of any act or
omission of the Manager or of any person acting under its supervision, whether or not
the said claim is well-founded.
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