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A Management Agreement sets out the terms when one party takes responsibility for operating and managing another party's business or assets. In Saudi Arabia, these contracts are especially common in hospitality, real estate, and family business sectors, where professional managers handle day-to-day operations while owners maintain ownership rights.

The agreement spells out key duties, performance standards, fees, and decision-making authority under Shariah-compliant terms. It must follow Saudi commercial laws and Ministry of Commerce regulations, particularly around foreign management companies. Good agreements include clear metrics for success, reporting requirements, and mechanisms for dispute resolution through local courts or arbitration centers.

Use a Management Agreement when bringing in professional managers to run parts of your business while maintaining ownership control. This arrangement works especially well for Saudi family businesses transitioning to professional management, hotel owners partnering with international operators, or property developers seeking specialized operational expertise.

The timing is right when you need clear boundaries between ownership and management, want to protect trade secrets, or must comply with Saudi investment regulations for foreign operators. A well-structured agreement becomes essential before letting external managers access sensitive business information or make significant operational decisions. Many Saudi businesses use these agreements during succession planning or expansion phases.

• Operating Management Agreement: Core business operations management, typically used for hotels and retail chains under Saudi franchise laws
• Property Management Contract: Focused on real estate asset management, common in commercial properties and residential compounds
• Construction Management Agreement: Specific to construction project oversight, following Ministry of Municipal and Rural Affairs regulations
• Short Term Rental Management Agreement: For vacation rentals and temporary accommodations under tourism authority guidelines
• Social Media Management Agreement: Digital presence management, incorporating Saudi Communications Commission requirements

• Business Owners: Saudi family businesses, property developers, and investment companies who maintain ownership while delegating operational control
• Professional Managers: Local or international management firms, hotel operators, and specialized service providers who take operational responsibility
• Legal Counsel: Saudi-licensed attorneys who draft and review agreements to ensure Shariah compliance and protect both parties' interests
• Government Regulators: Ministry of Commerce officials who oversee foreign management arrangements and enforce compliance
• Board Members: Corporate directors who approve management agreements and monitor performance metrics

• Scope Definition: List specific services, operational areas, and management responsibilities to be delegated
• Party Details: Gather corporate documents, commercial registrations, and authorized signatory information for both parties
• Performance Metrics: Define clear KPIs, reporting requirements, and success measurements aligned with Saudi business practices
• Compliance Check: Review relevant Ministry of Commerce regulations, especially for foreign management companies
• Fee Structure: Document base fees, performance bonuses, and payment terms in Saudi Riyals
• Template Selection: Use our platform's Saudi-compliant templates to ensure all essential elements are included correctly

• Party Identification: Full legal names, commercial registration numbers, and authorized signatories under Saudi law
• Scope of Services: Detailed description of management duties, authority limits, and decision-making powers
• Duration and Renewal: Clear term length, extension conditions, and notice periods following Saudi contract principles
• Compensation Structure: Management fees, performance bonuses, and payment terms in Saudi Riyals
• Shariah Compliance: Explicit statement of adherence to Islamic principles and Saudi commercial regulations
• Dispute Resolution: Specified Saudi court jurisdiction or approved arbitration center details
• Termination Rights: Grounds for contract ending, notice requirements, and handover procedures

A Management Agreement differs significantly from an Agency Agreement in Saudi Arabia, though both involve one party acting on behalf of another. The key distinctions lie in their scope, authority levels, and legal implications under Saudi commercial law.

• Scope of Authority: Management Agreements grant comprehensive operational control over specific business functions, while Agency Agreements typically focus on limited, specific transactions or representations
• Duration: Management Agreements are usually long-term arrangements for ongoing operations, whereas Agency Agreements often cover specific projects or time-limited activities
• Liability Structure: Managers act as internal operators with direct operational responsibility, while agents represent the principal externally with more limited liability
• Compensation Model: Management fees typically include base fees plus performance incentives, while agency relationships usually involve commissions or fixed fees per transaction
• Regulatory Oversight: Management Agreements face stricter scrutiny under Saudi foreign investment laws, especially in restricted sectors