Does Counselor Realty specify any penalties for failing to comply with Section 7.2?
Counselor_Realty Franchise · 2025 FDDAnswer from 2025 FDD Document
mployment or contract with Counselor or another Counselor franchisee.
- (e) You agree that the covenants contained in this Section 7.2 are reasonable and understand that your willingness to agree to such covenants is an important inducement and consideration for our entering into this Agreement. You must demonstrate compliance with this Section 7.2. Sections 7.2 (b), (c) and (d) also apply to guarantors of this Agreement, your spouse and children if Franchisee is a sole proprietorship, and your officers, directors, employees, partners, and each principal shareholder or owner if Franchisee is a corporation or other entity.
- 7.3 Inspection. Your Business and Office (including any Additional Office and Extension Office) shall be open to us for inspection without notice during the business day.
- 7.4 Agents. You must notify Counselor immediately in writing each time a licensed agent begins operating through your Office (including any Additional Office or Extension Office).
8. FINANCIAL STANDARDS.
- 8.1 Records and Reports. You must keep and give us the information, reports, books and records concerning the Office (including any Additional Office and Extension Office) and Business we specify, on forms or in media we specify periodically. You will allow us to inspect, copy and audit such records, both at the Office (including any Additional Office and Extension Office) and remotely by electronic means. If Franchisee is a partnership, corporation or other entity, you must provide us with copies of Franchisee's organizational documents (including, without limitation, as applicable, its articles of incorporation, bylaws, operating agreement or partnership agreement) and breakdown of ownership. You must report promptly to us any claim involving the Business and any change in the Franchisee's organizational documents.
- 8.2 Insurance. You must maintain types and levels of insurance coverage required by the state in which you operate your Business. You also must maintain other insurance required by law, and by your Office (including any Additional Office and Extension Office) lease or mortgage, and errors and omissions insurance coverage. You must maintain general liability insurance on an occurrence basis with a minimum limit of at least $1,000,000 per occurrence and $2,000,000 in the aggregate, and errors and omission insurance with a minimum limit of at least $1,000,000. Insurance shall be with insurers and on forms acceptable to us, shall name Counselor as an additional insured, and waive subrogation. If we buy such insurance because you fail to do so (which we may, but are not required to, do) you will reimburse us immediately upon request.
- 8.3 Indemnification.
Source: Item 22 — CONTRACTS (FDD page 32)
What This Means (2025 FDD)
According to Counselor Realty's 2025 Franchise Disclosure Document, Section 7.2 outlines the franchisee's obligations regarding best efforts, confidentiality, and conflicts of interest. While the document emphasizes the importance of these covenants, it does not explicitly state specific monetary penalties for failing to comply with Section 7.2.
However, the FDD states that the franchisee's agreement to these covenants is a significant inducement for Counselor Realty to enter into the franchise agreement. This suggests that failure to comply could potentially lead to broader consequences, such as breach of contract. Section 7.2(c) states that during the term of the Agreement, franchisees cannot own any interest in, or work for, engage in or assist, directly or indirectly, any real estate brokerage service business other than Counselor, or that competes with Counselor, at or within 50 miles of the Office (or any Additional Office or Extension Office) without Counselor's prior written approval.
Furthermore, Section 7.2(d) states that for twenty-four (24) months after the agreement expires, is terminated or is transferred, the franchisee will not solicit any agent, employee, or independent contractor of Counselor Realty or another Counselor Realty franchisee. It is important for a prospective franchisee to seek clarification from Counselor Realty regarding the specific repercussions of non-compliance with Section 7.2, as the FDD does not provide explicit details on this matter.