The management services agreement should be carefully drafted to provide the manager and his staff with the status of an independent contractor. The IRS rules and government laws to determine the status of independent contractors are too complex for a broad debate here. However, consideration is given to the extent to which the company is controlled by the manager and the control exercised by the executives over the company. A company may hire an independent contractor to do some work, but if the company is too involved to dictate how the work is done, the relationship can be determined as that of the employer and the worker. There are several companies that, for lack of expertise in one area or another, cannot reach the pinnacle of success. These companies should recruit contract management teams. In this way, they hire not only an experienced employee, but also a whole team of efficient and experienced collaborators in the technical fields of management, accounting, marketing, etc. Their performance management strategy should include: Business students are generally confused between the concepts of management and franchising contracts. Although they have a lot in common, as they both earn by selling intangible assets, and are both linked to another company, if a management contract serves as a framework and provides training and structure to the company and its members, the franchisee remains an independent businessman.
 There is some risk associated with using an external management company. One of the biggest risks for an entrepreneur is that those who work for the company are considered employees in accordance with IRS rules. As a result, the company must reimburse the national tax authorities and/or the IRS for all penalties, interest and employment taxes. Although companies are not fully protected from contractual audits or reclassifications, the implementation of written management service agreements can provide some degree of protection. Service contracts can be complex and valuable. They must actively manage the identified risks – good practices are to conduct an initial risk assessment during the planning phase of the acquisition process and to continue throughout the service agreement. Risk management includes: With a service management agreement, a company is assured of meeting its needs by the professionals who offer the service. These specialists should specialize in specific areas and be equipped with experience and knowledge to carry out the tasks described in the agreement. A management service contract can include many tasks, such as managing your employee payroll. B, the development and management of employee performance programs, accounting and accounting, corporate record keeping, debt and receivables processing, corporate insurance guarantee and the provision of advisory and advisory services for any number of requirements.