Management rights

Hi Micman,

By management rights, do you mean management rights to a leasehold property?

For instance, management rights to run a motel, caravan park, etc? Or perhaps franchise rights?

If so, then some tips I would give you include:

1. Remember you are buying an income stream, rather than a physical asset. The value in the business that you are creating can only be realised through business profits (while you own), or on the basis that you can find someone to sell the rights to. Some people build the business, can't sell it, and become either trapped in the business, or else walk away.

2. Therefore, make sure you have a clearly identified exit plan for how you will get out.

3. Remember that leasehold improvements generally stay with the property unless otherwise specified.

4. Get good legal advice on the management rights paperwork, as no doubt there are 10,001 unknows that can quickly add stress.

If you can provide more info on exactly what you are talking about, I may be able to help further.

All the best,

As Steve points out, essentially you are buying a cashflow business – ie your role is to manage the accommodation and to get commission from this management. If it is a shortstay/motel arrangement, then ensuring that you maximise the occupancy of the premises will ensure that you will be on track to max your commission.

Consider what forms of income does the premises generate? ie rent, cleaning charges, fees for general maintenance, reimbursement of % of marketing costs etc. Some of these can be quite lucrative however you will need to assess the management agreements with the individual unit holders (if the units are independently owned from the mgmnt rights).