The Management Operating Agreement is a crucial document used in the Philippine business context when an owner wishes to delegate operational control of their business or facility to a professional management company while retaining ownership. This arrangement is particularly common in industries such as hospitality, healthcare, and real estate, where specialized operational expertise is valuable. The agreement must comply with Philippine regulations, including the Corporation Code, Labor Code, and Foreign Investments Act. It typically includes detailed provisions on management authority, operational standards, financial arrangements, employee relations, and regulatory compliance. The document becomes especially complex when foreign management companies are involved, requiring careful consideration of the Anti-Dummy Law and foreign ownership restrictions. A properly structured Management Operating Agreement helps ensure clear delegation of authority while protecting both parties' interests under Philippine law.
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1. Parties: Identification of the parties entering into the agreement - the Owner/Company and the Management Operator
2. Background: Context of the agreement, including brief description of the business and purpose of the management arrangement
3. Definitions: Key terms used throughout the agreement
4. Appointment and Scope: Formal appointment of the operator and detailed scope of management services
5. Term and Renewal: Duration of the agreement and conditions for renewal
6. Operator's Rights and Responsibilities: Detailed description of operator's authority, duties, and limitations
7. Owner's Rights and Obligations: Owner's retained rights and continuing obligations
8. Personnel and Employment: Management of employees, staffing responsibilities, and compliance with labor laws
9. Financial Terms: Management fees, payment terms, and financial arrangements
10. Operating Standards: Performance standards and quality requirements
11. Reporting and Compliance: Regular reporting requirements and compliance obligations
12. Insurance and Liability: Insurance requirements and allocation of risks
13. Termination: Grounds for termination and consequences
14. Post-Termination Obligations: Obligations of parties after termination
15. Confidentiality: Protection of confidential information and trade secrets
16. Governing Law and Dispute Resolution: Application of Philippine law and dispute resolution mechanisms
17. General Provisions: Standard boilerplate clauses including notices, amendments, and assignment
1. Intellectual Property Rights: Required when the operation involves significant IP assets or brand usage
2. Environmental Compliance: Necessary for industries with environmental impact considerations
3. Force Majeure: Detailed force majeure provisions for high-risk operations or locations
4. Anti-Corruption Compliance: Enhanced compliance provisions for government-related or regulated industries
5. Data Protection: Detailed data handling provisions when significant personal or sensitive data is involved
6. Foreign Investment Compliance: Required when foreign operators are involved, addressing Anti-Dummy Law compliance
7. Competition Law Compliance: Necessary when the arrangement might raise competition law concerns
8. Crisis Management: Required for businesses in sensitive industries or public-facing operations
1. Schedule 1 - Property Details: Description of the managed property or business assets
2. Schedule 2 - Services Specification: Detailed description of management services to be provided
3. Schedule 3 - Key Performance Indicators: Specific performance metrics and targets
4. Schedule 4 - Fee Structure: Detailed breakdown of management fees and calculation methods
5. Schedule 5 - Required Insurance: Specific insurance requirements and coverage levels
6. Schedule 6 - Initial Business Plan: First-year operational and financial plans
7. Schedule 7 - Employee Handbook: Key employment policies and procedures
8. Schedule 8 - Operating Procedures: Standard operating procedures and guidelines
9. Appendix A - Required Permits and Licenses: List of required regulatory approvals and permits
10. Appendix B - Form of Reports: Templates for required operational and financial reports
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