What agreement must Engel & Volkers Principals sign regarding their ownership interest in the franchisee company?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
If you are a corporation or other entity, each of your owners that own 10% or more of you ("Principals") must sign a Principal's Guarantee and Assumption of Obligations attached to the Franchise Agreement (Appendix 4 to Exhibit C) agreeing to discharge all your obligations as Franchisee, including your payment obligations, under the Franchise Agreement. If the Principal is in a community property state or for other reasons we determine, the Principal's spouse may also have to sign the Guarantee form. Your Principals must also agree to retain an ownership interest in your company and to not dispose of their interest without our consent. All Principals must also sign a Principal's Acknowledgment agreeing to accept and be bound by their separate rights and obligations in the Franchise Agreement.
Source: Item 1 — THE FRANCHISOR AND ANY PARENTS, PREDECESSORS, AND AFFILIATES (FDD pages 8–15)
What This Means (2025 FDD)
According to Engel & Volkers' 2025 Franchise Disclosure Document, if the franchisee is a corporation or other entity, each owner holding 10% or more ownership (referred to as "Principals") must sign specific agreements related to their ownership interest. These Principals must agree to retain their ownership interest in the company and are restricted from disposing of their interest without the franchisor's consent.
In addition to maintaining their ownership, all Principals are required to sign a Principal's Acknowledgment. This acknowledgment signifies their acceptance of and agreement to be bound by the separate rights and obligations outlined in the Franchise Agreement. This ensures that the Principals are individually aware of and committed to their responsibilities under the franchise agreement.
Furthermore, each Principal must sign a Principal's Guarantee and Assumption of Obligations, which is attached to the Franchise Agreement as Appendix 4 to Exhibit C. This guarantee obligates the Principals to discharge all of the franchisee's obligations, including payment obligations, under the Franchise Agreement. In community property states, or if Engel & Volkers determines it necessary, the Principal's spouse may also be required to sign the Guarantee form. This comprehensive set of agreements ensures that the Principals are fully invested in and accountable for the franchisee's performance and adherence to the Franchise Agreement.