What aspects of the proposed assignee's business must meet Engel & Volkers' standards?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
party (whether by stock sale, asset sale, merger, operation of law or otherwise), Franchisee shall use its best efforts and shall employ reasonable security measures, including having any third parties who are to be presented with Confidential Information sign appropriate nondisclosure agreements which are acceptable to Franchisor, to prevent any unauthorized disclosure of or access to the Proprietary Information and shall immediately advise Franchisor of any information it has or receives of any unauthorized disclosure or access. Franchisee shall provide copies of all such non-disclosure agreements to Franchisor upon request.
If Franchisor does not elect to exercise its right of first refusal (as provided in Section 22.5 below), then Franchisor will not unreasonably withhold consent to Franchisee's sale, transfer or assignment of any interest in Franchisee (if Franchisee is a business entity), the
franchise conveyed by this Agreement and Franchisee's right to use the ENGEL & VÖLKERS System, or any interest in any of these, to a third party. Franchisee agrees that it will not be unreasonable for Franchisor to impose, among other requirements, the following conditions to granting consent to Franchisee's proposed sale, assignment or transfer of any of the foregoing:
- 22.3.1 That the proposed assignee (meaning individual or business entity which, after the proposed assignment, will be the franchisee under this Agreement or under any successor/renewal agreement) applies to Franchisor for acceptance as a franchisee and demonstrates to Franchisor's satisfaction that the proposed assignee (and, if it is a business entity, each and every Principal owner and guarantor of the proposed assignee) possesses the skills, qualifications, financial condition, background and history, reputation, economic resources, education, managerial and business experience, moral character, credit rating and ability to assume the duties and obligations under this Agreement or any successor agreement. Franchisee must pay the costs of any investigation required to be conducted by Franchisor.
Source: Item 22 — CONTRACTS (FDD page 88)
What This Means (2025 FDD)
According to Engel & Volkers' 2025 Franchise Disclosure Document, if a franchisee wishes to sell their franchise to a third party, the proposed assignee must meet certain standards to be approved by Engel & Volkers. The assignee must apply for acceptance as a franchisee and demonstrate that they possess the necessary skills, qualifications, financial condition, background and history, reputation, economic resources, education, managerial and business experience, moral character, credit rating, and ability to fulfill the obligations under the franchise agreement. If the assignee is a business entity, these requirements extend to each principal owner and guarantor of the proposed assignee.
Engel & Volkers requires the franchisee to cover the costs of any investigation the company deems necessary to conduct on the proposed assignee. This investigation ensures that the potential new franchisee aligns with the brand's standards and can maintain the quality and reputation of the Engel & Volkers system.
Additionally, both the franchisee and the assignee (including their owners and guarantors if either is a business entity) must execute Engel & Volkers' standard form of General Release. If the assignee is a business entity, they must comply with all requirements of the new Franchise Agreement related to business entities before Engel & Volkers will execute the new agreement. The proposed assignee, including its owners or affiliates, must not own, operate, have an interest in, or have a material business relationship with a business that competes with Engel & Volkers.