Examples of Management Contracts
Management contracts allow business owners like you to turn over complete responsibility for your business or part of your business to an individual or company. This allows you focus on one area of your business while an expert manages another, or it allows you to use your money to invest in a business even if you have no experience in the field or profession.
Contractors are not employees of a business or organization, and this reduces many of your burdens as an employer. When you hire a contractor, you are not responsible for her payroll taxes, benefits, office equipment, work rules and workers’ compensation and unemployment insurance. To prevent employers from taking advantage of these benefits, the Internal Revenue Service sets strict guidelines about how much control you can place on your contractor. For example, you cannot set her hours, require her to use your office space and equipment or tell her exactly how to perform her job.
Many trade associations are run as nonprofits, with boards of directors to steer the organization but not to run the day-to-day operations. Some don’t have the budget for a full-time staff. Such organizations often hire an association management company or contract executive director to handle dues renewals, accounting, communications, website management, meetings planning and sponsorship programs.
Sports facilities often contract out part of all of their operations. A tennis facility might hire a tennis professional to handle all on-court aspects of the business, while the owner manages the pro shop, marketing, reservations and facility upkeep. A golf course might contract out the pro shop, food and beverage or teaching areas of the course or club.
If you have an opportunity to buy or lease an apartment complex, vacation villa or other rented real estate, you can hire a property management company to handle the marketing, leasing, maintenance and tenant relations. This allows you to be a silent partner and avoid having to deal with leaky faucets, barking dogs, evictions and finding new tenants when current ones leave.
Many schools, dorms, sports facilities, nursing homes, hospitals, office buildings, malls and large businesses have on-site cafeterias, concession stands, lunchrooms or restaurants. These food-service areas are not a core business for the building or facility, so the owner leases out a food service concession or offers a food and beverage contract. The contractor often pays a lease and percentage of sales to the facility owner, taking all responsibility for marketing, preparing and serving the food.
Many professional actors, athletes and musicians turn over the management of their careers to an agent or manager. This person handles aspects of the celebrity’s career, including bookings, contracts, endorsements, appearances, investments and public relations. This type of manager often negotiates an athlete’s contracts with his team and sponsors, a musician’s recording contracts and a TV personality's network contracts. An agent often charges the artist or athlete a percentage of his annual earnings, with a percentage of those earnings continuing to accrue to the agent for six months or longer after his departure to reward him for the groundwork he laid before his departure.