Operating and Management Agreements
In certain industries, such as hotels and leisure, the concept of permitting a third party to operate your business on your behalf is well established. In other sectors, companies are increasingly recognising the advantages and value in terms of efficiency savings and enhanced levels of service in continuing to own ultimately and control their business but have a third party with greater experience and know-how to run that business for them on a day to day basis.
Under a typical Operating and Management arrangement the company will continue to own the business (and be liable for the performance of that business) but will, as in an outsourcing, look to a third party to provide an improved service at less cost.
Companies are therefore permitting a third party to operate their business on their behalf with the aim of utilising the operator's greater know-how and experience, and in some cases branding, to drive greater returns for the owner and a superior customer experience. For the operator, an Operating and Management Agreement enables it to increase its revenue, through management fees, but not usually require it to invest capital or assume the same level of risk as an owner of the business.
The Commercial Group has extensive experience of advising clients on complex Operating and Management structures ranging from hotel owners and operators to serviced offices, hospitals and agreements such as those to operate the Millennium Pier on behalf of the London Eye.