Difference between management contract and contract manufacturing
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Explanation:
A franchise contract is a licensing contract. A franchisee owns a business, but pays a proportion of profits, and conducts certain business operations in an agreed upon manner, in exchange for the permission to use the franchisor's business model and intellectual property.
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There is thin line of difference between management contract and contract manufacturing.
Explanation:
1. Management Contract
- When company is indulged in managing tasks of other organizations. Such companies take the contract of management services.
- Fees are the base of remuneration.
- Quality can be reduced. Lack of efficiency will be the matter of concern.
2. Contract manufacturing
- When a company takes the contract for manufacturing products as per specifications provided by the host company.
- Amount are charged based on products produced.
- Licensing of such companies are more risky.
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