With which company does Engel & Volkers have IT support agreements?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
oss incurred over a running three-year period which resulted in a 100% valuation allowance on the deferred tax assets. During 2021, the Company reduced its valuation allowance based on an assessment of the positive and negative evidence available. Management projected a three-year cumulative taxable income to utilize the deferred tax asset subject to certain limitations.
NOTE 10. RELATED-PARTY TRANSACTIONS
Support Agreements
The Company has entered into information technology ("IT") support agreements with Engel & Völkers Technology GmbH ("Engel & Völkers Technology"), a related party affiliated through common ownership, which allows for the partial reimbursement of certain IT costs. The costs related to the agreement are included in "Selling, general and administrative expenses" in the accompanying consolidated statements of comprehensive income
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 88)
What This Means (2025 FDD)
According to Engel & Volkers' 2025 Franchise Disclosure Document, the company has entered into information technology support agreements with Engel & Völkers Technology GmbH, a related party affiliated through common ownership. These agreements allow for partial reimbursement of certain IT costs, which are then included in "Selling, general and administrative expenses" on the company's consolidated statements of comprehensive income (loss).
The net expense related to these IT support agreements has been substantial over the past three years. Specifically, the expenses were $1,173,642 for the year ended December 31, 2024, $1,085,050 for the year ended December 31, 2023, and $911,844 for the year ended December 31, 2022. As of December 31, 2024, the amount outstanding from Engel & Völkers Technology was $250, which is included in "Due from affiliates, net" in the consolidated balance sheets. There was no outstanding amount from Engel & Völkers Technology at the end of 2023.
For a prospective Engel & Volkers franchisee, this related-party transaction indicates that a portion of the IT support is handled through an affiliated entity. While this arrangement may provide certain efficiencies or cost benefits, it is essential for franchisees to understand the nature and extent of these IT services, as well as the potential impact on their operational costs. It would be prudent for potential franchisees to inquire about the specifics of the IT support provided, the service level agreements, and how these costs are allocated or passed on to the franchisees.