Basics of Senior Care Facility Management Agreement 《养老社区管理协议》的基本要点

 

It has been over five years since we wrote the article “Ender into Senior Housing and Care Market in China”, at which time China had just introduced its 12th Five-Year Plan for the development of senior living industry. A lot of things—legislation, brands, product, supply and demand trend, among many others were unknowns to new entrants. Five years later, many operation brands, foreign and domestic, have emerged in the marketplace—some are doing pretty good and some are still struggling. Walking through the years, the market has evolved dramatically, and now it is a good time to have a recap.

自我们撰写《进入中国养老地产和护理市场》一文以来,一晃已有五年多时间。撰文当时,中国在“十二五”规划纲要中首次部署了发展养老产业的宏伟蓝图,对于市场的探索者来说,该领域的立法、品牌、产品及供求趋势等尚属空白。五年过去了,国内外不少运营品牌已经涉足中国养老市场,有的运营状况不错,但有的仍在摸索前行。经过几年时间的发展,养老市场已经经历了翻天覆地的变化,现正是重新审视一下行业环境的时候了。

The market status for foreign operators

国外运营者的生存状况

There was a time foreign brands are struggling with whether or not they shall have Chinese partners to work with. To answer that really requires leveraging the mixture of various factors—specialty, team, capital, commitment to the local market etc., which usually will be putting together as a company’s business strategy of moving to the China market. However, many actually are more opportunistic. Partners being chosen to work with, locations being selected, or even core team members on board are not happening in a strategic way. Often times, it is just opportunities haven’t been emerged in other possible ways.

曾有一段时间,国外运营品牌踌躇着是否应当与中方伙伴进行合作。解答这个问题需要综合考虑多种因素,比如专业程度、团队成员、资金支持和对当地市场的决心等,而将这些因素整合在一起,恰恰是一家公司进入中国市场所应制定的商业战略。但是,很多投资者更奉行机会主义的策略,他们选择合作者、选址、甚至是雇佣核心团队成员并非是按照既定的战略执行;更多时候,仅仅是因为在当时并没有找到其他更合适的机会而已。

Over the times, the route into China has become clearer, thanks to a couple of pioneers from the U.S, Europe, Australia and Japan. Here is a summary of their attitudes towards a partnership. First, they are open for various types of cooperation with Chinese partners. Even for those who do insist on the WFOE (Wholly Foreign-owned Enterprises) investment form (or going solo putting in another term) are not resistant to have a Chinese partner to help then get access to real assets, capital, government relationship and other resources. Second, the market has been developing rapidly, in particular in the merger and acquisition spectrum. Nowadays, you can find a number of deals where Chinese companies buy equity or assets of overseas senior care communities, large companies buyout startup business, and big brands merge, just to name a few. Today’s solo could be tomorrow’s cooperation. Third, as is played in every business, joint venture is still a prevalent approach to pursue when a foreign investor enters into a nascent market. Admittedly, in many industries, JV could be fragile where the parties fail to find mutual ground to accommodate diversified views and accomplish different goals. But for now it could be more risky and costly haven’t a Chinese partner working together and navigating a lot of uncertainties at the first place.

近几年,受益于来自美国、欧洲、澳大利亚和日本等国家运营者的前期探索,海外品牌进入中国市场的路径已日渐明朗。不妨来总结一下他们对于中外合作关系的态度:首先,他们对于与中方开展多种形式的合作方式持开放态度,即使是坚持选择外商独资企业的投资形式的国外运营者也并不排斥与中方进行合作,毕竟中方能给他们带来不动产、资金、政府关系等资源。其次,市场正在迅速发展,特别是在并购领域,已经有大量中国公司购买海外养老机构社区的股权或资产、集团公司收购创业公司以及大品牌之间的合并等等。行业的分分合合可谓并不鲜见。最后,正如在其他行业反复验证的一样,合资企业仍然是外国投资者进入新兴市场采用的盛行方式。不可否认,在许多行业中,当合作各方的意见或目标产生分歧而无法找到合适的解决方式时会存在诸多问题,但在当下若没有中方的合作者一起探索和耕耘中国的养老市场,外国投资者所面临的市场风险和经济负担将会更重。

In this context, the  most frequent way operators adopted to expand their landscape has to be the execution of “Facility/Community Management Agreement” with Chinese owner, a business model that U.S. operators are very familiar with and feel comfortable to start with in the Chinese market. It is neither new things for other operators, foreign or domestics, as during the years it has become one of the highly welcomed cooperative models for many real estate developers and insurance companies in China.

在此背景下,运营者最常见的项目开拓方式便是与中方业主签订“养老设施/社区管理合同”。美国运营者对该商业模式非常熟悉,通常更愿意在进入中国市场时选择此种合作方式。该模式对于其他国内外运营者来讲也并不陌生,因为近几年来它已经逐渐成为中国房地产开发商和保险公司热衷的合作模式之一。

Definition of Facility Management Agreement

《养老设施管理协议》的定义

The common definition of operation management is that manager is granted with full authority by owner and holds responsibilities and complete and full control and discretion in the operation, direction, management and supervision of a senior housing project. Operation management contract may vary in different context and forms due to particularity of different projects. It is particularly important to note for seasoned operators that typical Western-style contract terms in the Management Agreement have been developed in China to the extent that we cannot take it for granted that some well-accepted commercial terms in the U.S. context will also be working on the negotiation table with a Chinese partner.

运营管理,通常是指管理者接受业主的全权委托,负责养老地产项目的运营、指导、管理和监督,享有完整的控制权和自主权并承担相应的责任。由于项目的多样性,运营管理协议的内容和形式上会存在差异。尤其需要提醒经验丰富的运营商注意的是,源自国外的管理协议经过中国市场的演绎发展已经有了很大的变化,一些通常例如在美国可以被协议双方所接受的商业条款,未必能在与中国合作方谈判时也同样被接受。

Negotiating a management contract satisfactory to both the owner and manager is a work of art that requires patience and effort for all stakeholders. Closing a management deal is also a self-reflection journey to find out an operator’s bandwidth as well as reach a balance between the owner and itself. In a typical 30 to 40 pages’ management contract, there are lines both parties care about the most, failure to achieve mutual agreement of which may cause a negotiation broken.

谈妥一份让业主和管理者均满意的管理协议是一门艺术,需要利益各方付出足够的耐心和毅力。同时,达成一项管理合同交易的过程也是运营方反省自身能力,并找到与业主利益平衡点的旅程。在一份典型的30至40页的管理协议中,包含了合同双方最为关心的利益点,若无法达成共识将会导致谈判的破裂。

Ten Basics for a Senior Care Community Management Agreement

《养老社区管理协议》的十个基本问题

1、Is due diligence necessary?

是否有必要进行尽职调查?

Many think it does not worth the time and cost to conduct a due diligence but actually it does. Simply because the negotiation of a Management Agreement is a time and money cost process for many foreign operators, it is extremely important to conduct a preliminary legal and commercial due diligence to exclude opportunities that don’t fit for the parties at the first place. When negotiation goes on, further due diligence regarding project information and owner’s track record on selected items recommended by an experienced counsel is necessary, as the result of which might affect major commercial terms in the Management Agreement.

很多人认为不值得耗费太多的精力和财力来进行尽职调查,事实上这种想法是错误的。简单地说,正是因为管理协议的谈判对于国外运营者来说是一个耗费时间和金钱的过程,所以更需要进行初步的法律和商业尽职调查,以便在一开始就排除不合适的合作机会。在进入谈判后,根据富有经验的律师所建议的内容对项目状况和业主背景进行进一步的尽职调查也十分有必要,因为这将影响到关于管理协议中一些重要商业条款的决策。

2、What are signing parties of a Management Agreement?

管理协议的签约主体?

A foreign operator can choose to set up a Wholly Foreign-owned Enterprise (“WFOE”) or Joint Venture (“JV“) to conduct business in China as a manager. Whether a Chinese partner holds stake in the management company could make a lot of difference for a manager in the bargaining power of such agreement.

国外运营者可以选择在中国设立外商独资企业或者合资、合作企业作为管理者开展业务。中方合作者是否持有管理公司的股份,会对管理者在该协议的谈判能力上带来巨大差异。

Company incorporation procedure for foreign investor has been simplified in China in recent years, and usually there is no restriction to establish a senior care management, consulting or service company to sign and execute a Management Agreement. However, it is advisable to carefully choose business scope of the management company as that will have significant impact on a foreign investor’s capacity to conduct business in China.

对于外国投资者来说,在中国设立公司的流程近几年已经逐渐简化,通过设立养老管理、咨询或服务公司来签署并履行管理协议一般不会存在障碍。但是,务必谨慎选择管理公司的经营范围,因为这将会影响到外国投资者在中国开展业务的能力。

3、What is common Fee Structure for the manager?

管理者的常见收费机制是什么?

Management services are usually defined at different stages of project development: pre-opening consulting and technical support, operation management as of facility opening, support on the property sales (often seen in multi-stage and mixed-used developments), and other services such as day care and home care services (optional). Accordingly, fees can be charged in forms of consultancy fee, base fees, incentive fees, brand use fees, etc. There are benchmarks from the Western market we can refer to as to how much those fees can be charged. For example, base fees usually vary from 3 to 6 percent of gross revenue, and incentive fees can be determined by earning result of the community. However, when the facility management model is transformed and evolved in China, those references from other countries have become less reliable for operators as market performance is hard to project but operation cost in a new market is usually higher than that in developed markets—therefore, it is also common to agree on a minimum monthly fee in case the calculated base fees result in short of its expenses.

管理服务内容根据项目开发的不同阶段,通常分为开业前的咨询和技术服务、设施开业后的运营管理、不动产销售方面的支持(通常见于分期开发或综合用途的项目)和其他诸如日间照料和居家护理服务(可选择)等。因此,管理费用也会按照咨询费、基本管理费、奖励管理费和品牌使用费等进行分类。至于具体的费用金额,可以参考国外市场的收费标准。例如,基本管理费通常为毛收入的3%到6%,奖励管理费可根据社区机构的实际收益来确定。然而,当社区管理模式进入中国市场并经过演化后,上述参考标准对于运营者来说变得不再那么可靠,主要由于中国的市场表现尚难以预测,但新兴市场的运营成本却比成熟市场高出很多。因此,还有一种比较普遍的做法是,当按照一定百分比计算所得的基本管理费少于管理者的开支,则按照一项最低的月费标准收取。

Accounting rules specific to gross revenue, net income and cash flow is also important to be clearly defined if any of the fees are calculated based on these factors.

如果管理费用的计算是基于总收入、净收益和现金流等数据,则适用的会计准则也需要进行明确定义。

4、Is the royalty fee for using the operator’s brand common to charge?

运营方收取品牌使用费是否常见?

It is not common in Facility Management Agreement because a manager’s reputation and expertise have been reflected in the fee structure at above point 3. However, in a multi-stage development project, the owner/developer will be willing to discuss a brand use fee if part of the project is for sale and the operator’s brand and participation in the sales and marketing activities (usually together with manager’s service available to the homeowners) is expected to make a great contribution to the project value. In those cases, brand use fees generally represent a fixed percentage of the sales price of real property, mostly like what branded residence under hotel groups will charge but usually lower than the benchmark in a hotel business.

品牌使用费在《设施管理协议》中并不常见,因为管理者在声誉和专业方面的价值通常已经在上述第三点的收费中体现出来。但是,在分阶段开发的项目中,如果部分物业是可售的,且运营者的品牌和参与度(通常运营者同时也为私人业主提供后续管理服务)对项目价值的提升有重要帮助的,此时业主或开发商也会愿意商谈品牌使用费。在这些情况下,品牌使用费往往按照物业销售价格的一定百分比收取,与服务式公寓的收费模式比较接近,但收费标准通常会低于酒店行业。

5、Manager’s autonomy vs. owner’s appropriate supervision in daily operations

如何在日常运营中平衡管理者的自主权和业主适当的监督权?

In the fight of decision making of daily operation issues, manager definitely seeks complete and full control and discretion over the operation without intervention of the owner; however, the owner wants to make sure it will not assume the operational risks as a result of manager’s wrongdoing, and the manager will make proper and good use of its money.

在日常运营问题的决策中,管理者和业主存在一定的对立面:管理者追求拥有运营的绝对控制权和自主权,且不受业主的干扰;但是,业主却需要确保避免承担由于管理者的不当行为导致的运营风险,且管理者是否在恰当合理地使用其资金。

A lot of practices in the hospitality industry can be transformed in this respect as fights alike have been taking place and addressed in China for over a decade. Participation of an owner’s representative in daily operation can be carefully designed. It can be very useful to coordinate tons of matters in day-to-day operations. It is also common for a manager to hold firm position to make decisions on expenditure within approved budget, prepare and execute marketing and sales plans, recruit and train employees, draft and implement residency policy and documentations, etc.

酒店行业经过在中国十余年的发展,已经在这方面积累了很多可借鉴的经验。譬如,在日常运营中巧妙地融入一名业主代表参与,将有益于与管理者协调处理大量运营中出现的繁杂事务。但通常情况下,管理者会在多个重要方面要求完全的自主决定权:如预算内的支出、准备并执行市场销售计划、招聘并培训雇员和起草并执行入住规定及各项文件等。

In a multi-stage project development, a manager may only participate in a portion of community management job. In that case, other consultants, service providers or stakeholders may be involved. It is of great importance for the manager to define clearly of its duty and authority of management in order to avoid intervention by third parties, or in some instances being blamed for the failure of a project not attribute to it.

在分阶段开发项目中,管理者可能只参与一部分社区管理工作。在这种情况下,其他顾问、服务提供者或利益相关者会承担不同的职责。为避免第三方的干预或有时被无故推责,管理者对其职责与管理权限范围的明确至关重要。

6、What performance test clause usually provides?

如何约定业绩考核条款?

Performance text clause usually entitles an owner a right to elect an early termination in the event the community is under-performed. This requires a lot of elaboration as the pricing model, market projection, project cost has a lot to do with the metrics of performance. With less confidence and experience in the Chinese local market than in their home countries, managers are very cautious in choosing earning-based or expense-based tests formula. More often, performance test is as easy as simply based upon the occupancy rate.

业绩考核条款通常是在社区运营情况不佳时赋予业主提前终止的权利。业绩考核条款需要仔细研究,因为定价方式、市场预测、成本预算等因素都与项目的绩效息息相关。比起对本国市场的熟悉程度,国外管理者对于中国市场缺乏信心和经验,他们对选择基于收入还是基于成本的计算方式较为谨慎。常见的一种简单的考核标准是通过入住率来衡量。

7、Who will recruit and employ operation team?

谁负责招聘和雇佣运营团队?

While in the hotel industry it has been well accepted that an owner’s entity which operate a hotel will employ all operational staffs but the senior ones (e.g. hotel General Manager) usually report to the manager, practice in the senior care industry is a bit different that many of the senior level employees are employed by the manager, and owner may only reimburse part of the HR cost.

酒店行业的普遍做法是,业主通过运营酒店的实体来雇佣所有运营员工,而高级管理人员(比如酒店总经理)通常仅向管理者汇报工作。但是,在养老行业的实践做法会有一些不同——许多高级管理人员由管理者直接雇佣,而业主仅承担与其相关的部分人力资源成本。

From the manager’s perspective, it is a highly professional business that senior operation and marketing people need to be retained by themselves to protect their knowhow and avoid the risk of losing control over project. Burden to have more HR cost will usually reflect on the fee arrangement so eventually it aims to be shared by the owner.

从管理者的角度来看,养老运营管理是一项高度专业化的事业,高级运营和销售人员必须由他们自己雇佣以保护他们的专业技术,避免对项目失去控制权的风险。这些人力资源成本通常会反映在管理者的收费上,因此它们最终还是由业主分担。

8、Typical terms of a Management Agreement and where early termination can apply

管理协议通常的期限和提前终止的适用情形

It is typically between 10 to 20 years. Sometime in an agreement with a relatively short term, a manager will have a renewal right if certain conditions are met. Early termination usually applies when managers fail to pass the performance tests during a certain period of time. Occasionally, manager will ask for a right to cure a failure by paying remedies to the owner in order to continue with the facility management.

管理协议期限通常约定在10年到20年之间。有时,在期限相对较短的协议中,管理者享有在一定条件下的续约权。当管理者在特定时间内未通过业绩考核时,提前终止条款就会适用。少数情况下,为了继续履行管理协议,管理者会通过向业主支付赔偿金来获得补救的权利。

9、How operational risks are allocated between the owner and manager?

业主和管理者如何分担运营风险?

A manager has a duty of care to fulfill its diligence in day-to-day operations. However, while operational risk in the senior care business is high, a manager usually will only agree to hold the liabilities arising from its misconduct or wrongdoing under severe circumstances, and a manager’s liability to reimburse the owner is only on top of what the premium owner can firstly acquire from a liability insurance policy. Apart from these, ordinary risks arise in the course of daily operations are usually born by owner.

管理者应当在日常运营过程中充分履行自己的勤勉义务。但是,由于养老业务运营风险之高,管理者通常只愿意承担由其严重的不当或不法行为引起的责任,并且管理者赔偿业主的责任仅局限于责任保险政策中业主可获得理赔额之外的损失。除此之外,正常的运营风险都是由业主承担。

10、Is exclusivity clause common for a manager to agree?

管理者通常会同意排他性条款吗?

Exclusivity is not common in a pure management agreement. But in some circumstances, owner might request an exclusive cooperation in specific region (territorial or radius restrictions) while the owner has a pipeline to develop multiple senior care communities in targeted region and seek cooperation with the same manager. Situation may be different if the owner has an equity interest in the manager’s corporation, as in those cases need to restrict competition becomes mutual interest for both to consider. Having that said, it is not common for the manager to charge an exclusive fee.

排他性条款在单纯的管理协议中并不常见。但是在某些情况下,如果业主有计划在目标区域开发多个养老护理社区,它可能会要求管理者在特定地区(地域或商业半径)内进行排他性合作。如果业主同时也是管理者公司的股东,那么情况就会不一样,因为出于双方的共同利益,有必要考虑限制竞争的机制。尽管如此,管理者收取排他性费用的情况并不常见。

文章回复