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'{{Unreferenced stub|auto=yes|date=December 2009}} A '''management contract''' is an arrangement under which operational control of an [[Business|enterprise]] is vested by contract in a separate enterprise which performs the necessary managerial functions in return for a fee. Management contracts involve not just selling a method of doing things (as with [[franchising]] or [[licensing (strategic alliance)|licensing]]) but involves actually doing them. A management contract can involve a wide range of functions, such as technical operation of a production facility, management of personnel, accounting, marketing services and training. In Asia, many hotels operate under management contract arrangements, as they can more easily obtain [[economies of scale]], a global reservation systems, brand recognition etc. It is not unusual for contracts to be signed for 25 years, and having a fee as high as 3.5% of total revenues and 6-10% of gross operating profit. The [[Marriott International]] Corporation operates solely on management contracts. Management contracts have been used to a wide extent in the airline industry, and when foreign government action restricts other entry methods. Management contracts are often formed where there is a lack of local skills to run a project. It is an alternative to [[foreign direct investment]] as it does not involve as high risk and can yield higher returns for the company. == == Headline text == == ==See also== * [[Outsourcing]] {{DEFAULTSORT:Management Contract}} [[Category:Strategic alliances]] [[Category:Contract law]] {{Business-stub}}'