Operating Management Agreement Template for Saudi Arabia

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Operating Management Agreement

"I need an Operating Management Agreement for a Saudi retail mall property, where an international facility management company will handle all operations including maintenance, security, and tenant relations, starting March 2025."

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What is a Operating Management Agreement?

The Operating Management Agreement is a crucial document used when a property owner or business entity wishes to delegate the operational management of their asset to a specialized operator while retaining ownership. This arrangement is common in Saudi Arabia across various sectors, particularly in hospitality, real estate, and facility management. The agreement must comply with Saudi Arabian law, including both secular commercial regulations and Sharia principles, while detailing the operator's authority, responsibilities, and limitations. It typically includes comprehensive provisions for operational standards, staff management, financial arrangements, reporting requirements, and risk allocation. This document is particularly important in the Saudi market where foreign expertise is often sought for operational management while maintaining local ownership structures in compliance with foreign investment regulations.

What sections should be included in a Operating Management Agreement?

1. Parties: Identification of the Owner and the Operator/Manager, including full legal names and addresses

2. Background: Context of the agreement, description of the business/property to be managed, and parties' intentions

3. Definitions: Detailed definitions of 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, commencement date, and renewal provisions

6. Operator's Rights and Obligations: Comprehensive list of the operator's responsibilities, authority limits, and service standards

7. Owner's Rights and Obligations: Owner's responsibilities, including provision of resources and cooperation requirements

8. Staff and Employment: Provisions regarding employment, training, and management of staff

9. Financial Arrangements: Management fees, payment terms, expenses, and financial reporting requirements

10. Operating Standards: Required quality standards, KPIs, and performance metrics

11. Reporting and Compliance: Regular reporting requirements and compliance with laws and regulations

12. Insurance and Liability: Insurance requirements and allocation of risks between parties

13. Termination: Grounds for termination, notice requirements, and consequences of termination

14. Handover Provisions: Process and requirements for business handover upon termination

15. Governing Law and Dispute Resolution: Applicable law and mechanisms for resolving disputes

16. General Provisions: Standard boilerplate clauses including notices, amendments, and assignment

What sections are optional to include in a Operating Management Agreement?

1. Intellectual Property Rights: Provisions for IP ownership and licensing when specific IP assets are involved

2. Non-Competition: Restrictions on operator's competing activities, used when protecting market position is crucial

3. Emergency Services: Special provisions for emergency situations, particularly relevant for critical facilities

4. Environmental Compliance: Specific environmental obligations when managing environmentally sensitive operations

5. Force Majeure: Provisions for unforeseen circumstances, particularly relevant in high-risk environments

6. Marketing and Branding: Requirements for marketing and brand management when operator's brand is being used

7. Technology Systems: Provisions regarding use and maintenance of specific technology systems when relevant

8. Shariah Compliance: Specific provisions ensuring compliance with Islamic principles when required by parties

What schedules should be included in a Operating Management Agreement?

1. Schedule 1 - Property Details: Detailed description of the property or business being managed

2. Schedule 2 - Services Specification: Detailed scope of services and performance standards

3. Schedule 3 - Fee Structure: Detailed breakdown of management fees, incentives, and payment calculations

4. Schedule 4 - Key Performance Indicators: Specific performance metrics and measurement criteria

5. Schedule 5 - Operating Budget: Initial operating budget and budget preparation procedures

6. Schedule 6 - Staff Organization: Organization structure and key personnel requirements

7. Schedule 7 - Operating Policies: Standard operating procedures and policies

8. Schedule 8 - Required Insurance: Detailed insurance requirements and coverage levels

9. Appendix A - Required Reports: List and formats of required operational and financial reports

10. Appendix B - Handover Checklist: Detailed requirements for property/business handover

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions
Clauses
Relevant Industries

Hospitality

Real Estate

Healthcare

Education

Retail

Manufacturing

Logistics

Facilities Management

Infrastructure

Entertainment

Sports Facilities

Shopping Centers

Industrial Operations

Commercial Properties

Relevant Teams

Legal

Operations

Finance

Human Resources

Compliance

Risk Management

Business Development

Property Management

Facility Management

Project Management

Asset Management

Contract Administration

Relevant Roles

Chief Executive Officer

Chief Operating Officer

Operations Director

General Manager

Facility Manager

Legal Counsel

Contract Manager

Property Manager

Business Development Director

Finance Director

Human Resources Director

Risk Manager

Compliance Officer

Project Manager

Asset Manager

Industries
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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