Case Study

New Suburban Campus

by Bill d'Apice and Jennifer Paterson
19 November 2015
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Client: Tertiary education institute

Issue:

Our client is an education institute based in the Sydney metropolitan area which was established in 1923 and currently offers Diplomas in Business and Business Administration as well as Certificate courses in areas such as business, hospitality, business administration, business administration (education), aged care, marketing and frontline management. 

In recent years competition for students in this area has increased markedly. 

In 2014, our client was approached by an unrelated course delivery and professional development organisation, which provides education in the tertiary and professional learning space through partnerships interstate with approved providers across various fields of the education industry.

That organisation (Service Provider) proposed that it open a new campus in Western Sydney (offering some of the same courses already offered by our client), which it would establish and operate in exchange for a management services fee, being a percentage of the tuition fee paid by students of courses at the new campus.

Our role:

Our role was to draft a Management Services Agreement between the parties, with a particular focus on minimising the risk – both financial and reputational - to our client arising from the transaction.

Solution:

Having been established over 90 years ago and long having enjoyed a good reputation as an education provider in Sydney, it was imperative to our client that its reputation not suffer as a result of it agreeing to allow the Service Provider to establish a new campus in Western Sydney under its name.  Further, our client needed to protect its registration as a Registered Training Organisation (RTO).

However, if successful, the new campus would provide our client with additional income in exchange for relatively minimum input by it.

The terms of the Management Services Agreement were drafted such that:

  • The Service Provider was required to not do anything which would jeopardise the reputation of our client or its registration as an RTO;
  • Our client would enrol and collect tuition fees from students;
  • Our client retained the right to terminate the Management Services Agreement in the event that the Service Provider did anything to jeopardise our client's reputation;
  • The roles of each party in the day-to-day operation of the Parramatta campus are clearly defined, such as which party will be responsible for:
    • enrolling and collecting fees from students;
    • recruitment and employment of staff at the new campus; and
    • the curriculum.
  • The directors of the Service Provider would personally guarantee the Service Provider's obligations under the Management Services Agreement.