Does the automatic termination of the Engel & Volkers franchise agreement require notice to the franchisee?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
- 20.2 Automatic Termination Without Notice.
Franchisee will be in default under this Agreement, and all rights granted in this Agreement will immediately and automatically terminate and revert to Franchisor without notice to Franchisee, if: Franchisee, the franchised Business or any affiliate or Guarantor thereof is adjudicated as bankrupt or insolvent; all or a substantial portion of the assets of the franchised Business are assigned to or for the benefit of any creditor; a petition in bankruptcy is filed by or against Franchisee, the franchised Business and/or any affiliate or Guarantor thereof and is not immediately contested and thereafter dismissed or vacated within sixty (60) days from filing; Franchisee, the franchised Business and any affiliate or Guarantor thereof cause, permit or acquiesce in an order for relief under the U.S.
Source: Item 22 — CONTRACTS (FDD page 88)
What This Means (2025 FDD)
According to Engel & Volkers's 2025 Franchise Disclosure Document, under certain conditions, the franchise agreement can be automatically terminated without notice to the franchisee. Specifically, if the franchisee, the franchised business, or any guarantor is adjudicated bankrupt or insolvent, or if a substantial portion of the assets are assigned for the benefit of creditors, the agreement terminates automatically. Similarly, if a bankruptcy petition is filed by or against the franchisee, the franchised business, or any guarantor and is not contested and dismissed within 60 days, the agreement will automatically terminate.
This lack of notice in these specific scenarios means that an Engel & Volkers franchisee could lose their franchise immediately upon the occurrence of these events. This differs from other termination scenarios where Engel & Volkers may provide a notice and an opportunity to cure the default.
It is important for a prospective Engel & Volkers franchisee to understand these automatic termination conditions, as they represent significant risks to their investment. Franchisees should ensure they have adequate financial safeguards and business practices in place to avoid these situations that could lead to immediate termination without any chance to rectify the issue.