What Is a Management Contract?

A management contract refers to an international enterprise with management advantages who assigns other management personnel to a certain enterprise in another country to undertake business management tasks and obtain a certain management fee. Management contract is actually an international management technology trade. This contract management right can be used to manage all the business activities of an enterprise, or it can be used to manage only some activities or functions of the enterprise, such as production or marketing. Regardless of whether the scope of management is large or small, the responsible international management company cannot enjoy ownership. It only receives the management fee stipulated in the contract. This management fee can be a fixed amount, can be based on sales, or can be fixed Plus dividends.

Management contract

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A management contract refers to an international enterprise with management advantages who assigns other management personnel to a certain enterprise in another country to undertake business management tasks and obtain a certain management fee. Management contract is actually an international management technology trade. This contract management right can be used to manage all the business activities of an enterprise, or it can be used to manage only some activities or functions of the enterprise, such as production or marketing. Regardless of whether the scope of management is large or small, the responsible international management company cannot enjoy ownership. It only receives the management fee stipulated in the contract. This management fee can be a fixed amount, can be based on sales, or can be fixed Plus dividends.

Advantages and disadvantages of management contract entry mode:

The enterprise provides management services for foreign hotels, airports, hospitals or other organizations, and collects management fees.

Advantages: (1) Export management services, low risk.

(2) Conducive to expanding the influence of enterprises in the local market.

(3) It is beneficial for enterprises to understand local market conditions.

Disadvantages: It is a similar enterprise with the receiving party, and it is difficult to compete with the other party.