What is the Engel & Volkers agreement's definition of 'Covenant Not to Compete'?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
als and other instructional content; financial and non-financial books and records; the System Documentation; and, computer databases, software and manuals) which is then in Franchisee's possession or, upon Franchisor's request, destroy all or certain such Confidential Information and certify such destruction to Franchisor.
- 15.5 Execution of Separate Agreement. Each shareholder, partner, member, officer, director, brokerage manager and office manager of Franchisee shall execute Franchisor's form of Confidentiality Agreement and Covenant Not to Compete attached as Appendix 3.
16. Non-Competition
16.1 Competition During Term of Agreement: Franchisee hereby agrees not to provide residential or commercial real estate brokerage services, or any component thereof, competing with the ENGEL & VÖLKERS System during the Term (as defined hereinafter), either directly or indirectly, in an employed or a self-employed capacity, for its own account or for the account of a third party, as a proprietor, partner, investor, shareholder, member, director, manager, officer, employee, principal, agent, advisor, consultant, lessor, sublessor or any similar capacity, either from an Approved Location or any other geographic location whatsoever. Moreover, any spouse, domestic partner or immediate family member of any of Franchisee's Principal(s) may not provide residential or commercial real estate brokerage services, or any component thereof, competing with the ENGEL & VÖLKERS System during the Term of this Agreement (as defined hereinafter), either directly or indirectly, in an employed or a self-employed capacity, for its own account or for the account of a third party, as a proprietor, partner, investor, shareholder, member, director, manager, officer, employee, principal, agent, advisor, consultant, lessor, sublessor or any similar capacity, unless such services are outside a seventy five (75) mile radius of any Approved Location of Franchisee. With the prior written approval of Franchisor, Franchisee may engage in other business activities that do not involve other competitive residential or commercial real estate agency services.
Source: Item 22 — CONTRACTS (FDD page 88)
What This Means (2025 FDD)
According to Engel & Volkers' 2025 Franchise Disclosure Document, the covenant not to compete restricts franchisees from engaging in competitive real estate activities during the term of the agreement. Specifically, franchisees cannot provide residential or commercial real estate brokerage services that compete with the Engel & Volkers system. This restriction applies whether the franchisee is directly or indirectly involved, such as through employment, self-employment, or in any capacity as a proprietor, partner, investor, shareholder, member, director, manager, officer, employee, principal, agent, advisor, consultant, lessor, or sublessor. This non-compete obligation applies regardless of whether the activity is conducted from the Approved Location or any other geographic location.
The non-compete extends to the franchisee's spouse, domestic partner, or immediate family members of the franchisee's principals. These individuals are also prohibited from providing competing real estate brokerage services during the term of the agreement, unless such services are outside a 75-mile radius of any Approved Location of the franchisee. This broad reach aims to prevent any potential circumvention of the non-compete obligations through close relatives or associates.
Engel & Volkers may grant prior written approval for franchisees to engage in other business activities that do not involve competitive residential or commercial real estate agency services. However, these activities must be conducted through a separate legal entity, under a different trade name, and in a manner that prevents the public from associating the business with the Engel & Volkers system. Engel & Volkers reserves the right to establish policies and procedures in the System Documentation to ensure these activities remain separate from the franchised business. This ensures that franchisees do not leverage the Engel & Volkers brand or resources to promote competing ventures.
Breaching the non-competition provisions outlined in Section 16 of the Franchise Agreement, or if one of the Principals breaches the Confidentiality Agreement and Covenant Not to Compete, constitutes grounds for termination of the franchise agreement. This underscores the importance Engel & Volkers places on preventing competition from its franchisees during the term of the agreement.