What constitutes a breach of the non-competition provisions for an Engel & Volkers Principal?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
- 20.3.6 commits a breach of the non-competition provisions set forth in Section 16 or one of the Principals commits a breach of the Confidentiality Agreement and Covenant Not To Compete;
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. However, all these activities must be conducted through a separate legal entity and another trade name and in a manner (including from a separate location if Franchisor, in its sole judgment, believes it is necessary) that eliminates the prospect that the public might believe the business is related to the ENGEL & VÖLKERS System in any way. Franchisor reserves the right to establish policies and procedures in the System Documentation about keeping these activities separate from the franchised Business.
Source: Item 22 — CONTRACTS (FDD page 88)
What This Means (2025 FDD)
According to Engel & Volkers' 2025 Franchise Disclosure Document, a breach of the non-competition provisions by a Principal is grounds for termination of the franchise agreement. Specifically, section 20.3.6 states that if one of the Principals commits a breach of the Confidentiality Agreement and Covenant Not To Compete, it constitutes a cause for termination.
Section 16.1 outlines the non-competition agreement, stating that the franchisee agrees not to provide residential or commercial real estate brokerage services that compete with the Engel & Volkers system during the term of the agreement. This includes both direct and indirect competition, whether in an employed or self-employed capacity, and applies to various roles such as proprietor, partner, investor, shareholder, member, director, manager, officer, employee, principal, agent, advisor, consultant, lessor, or sublessor. This restriction applies regardless of whether the services are provided from an Approved Location or any other geographic location.
The non-compete extends to the franchisee's spouse, domestic partner, or immediate family members of the Principal(s), preventing them from providing competing residential or commercial real estate brokerage services within a 75-mile radius of any Approved Location. The franchisee may engage in other business activities that do not involve competitive residential or commercial real estate agency services with prior written approval from Engel & Volkers. 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.