Which of the following accurately defines management contracts?

Management contracts are arrangements in which one party provides managerial expertise and operational control over a business without taking ownership of it. This allows firms to leverage the skills and knowledge of an experienced management team to run the business effectively, while the ownership remains with another party.

In this context, that option is correct as it emphasizes the core function of management contracts: enabling companies to manage operations without incurring the responsibilities and risks associated with ownership.

The other choices highlight aspects that are not characteristic of management contracts. For instance, outright ownership is not a part of management contracts, nor do they inherently require significant investments in new equipment, as the focus is on management rather than capital expenditure. Furthermore, while marketing may be a component of the management duties, management contracts are not solely focused on product marketing but rather encompass a broader range of operational management tasks.