As businesses grow, it becomes increasingly difficult for owners to oversee all aspects of their operations. That`s where an Operating Management Agreement (OMA) comes into play. An OMA is a legal contract between an owner and an operating manager that outlines the roles and responsibilities of both parties. In this article, we`ll discuss the key aspects of an OMA and why it`s essential for businesses to have one.
Definition of an Operating Management Agreement
An operating management agreement is a legal document that outlines the roles and responsibilities of an owner and an operating manager. The document lays out the specific duties that the operating manager will perform, including overseeing operations, managing employees, and ensuring that the business runs smoothly. The agreement can be customized to fit the specific needs of the business.
Why Your Business Needs an OMA
An OMA is crucial for businesses that are looking to expand their operations or are struggling to manage all aspects of their business effectively. The agreement allows owners to delegate operational tasks to a capable and experienced manager without losing control of the business. By doing so, owners can focus on other aspects of the business, such as strategy, finance, and marketing.
Key Aspects of an OMA
A well-drafted OMA should include the following key aspects:
Roles and Responsibilities: The agreement should outline the specific duties that the operating manager will perform. This includes tasks such as managing employees, overseeing operations, and developing business plans.
Compensation: The agreement should specify the compensation that the operating manager will receive. This can be in the form of a salary, bonuses, or equity.
Term of Agreement and Termination: The OMA should specify the length of the agreement and the conditions that would allow either party to terminate it. This could include breach of contract, bankruptcy, or death.
Confidentiality and Non-Compete: The agreement should include clauses that protect the business`s confidential information and prevent the operating manager from competing with the business during or after the agreement`s term.
Conclusion
In conclusion, an Operating Management Agreement is a critical document that helps businesses manage their operations effectively. The agreement outlines the roles and responsibilities of both parties, allowing owners to delegate tasks to capable managers while retaining control of the business. A well-drafted OMA should include essential aspects such as roles and responsibilities, compensation, term of agreement, and confidentiality and non-compete clauses. Businesses looking to expand their operations or improve their management should consider drafting an OMA.