What is the definition of 'Offer' in the context of Engel & Volkers' right of first refusal?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisee or any of its owners wish to solicit, offer, or discuss the assignment of any equity or economic interest in Franchisee or assets of its business to a third 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.
Source: Item 22 — CONTRACTS (FDD page 88)
What This Means (2025 FDD)
According to Engel & Volkers' 2025 Franchise Disclosure Document, an 'offer' in the context of the right of first refusal relates to the franchisee's intention to transfer ownership or assets to a third party. Specifically, if a franchisee wishes to solicit, offer, or discuss the assignment of any equity or economic interest in the franchise, or the assets of its business, to a third party, this triggers the right of first refusal for Engel & Volkers. This includes scenarios such as a stock sale, asset sale, merger, or any other method of transferring ownership.
Engel & Volkers retains the first option to purchase the franchise business under the same terms offered to the third party. If Engel & Volkers declines to exercise this right, they cannot unreasonably withhold consent to the franchisee's sale, transfer, or assignment of interest to the third party. However, Engel & Volkers can impose certain conditions, such as ensuring the proposed assignee meets their standards for franchisees, including possessing the necessary skills, qualifications, financial condition, and business experience.
This right of first refusal allows Engel & Volkers to maintain control over who becomes a franchisee within their system, ensuring that new franchisees meet their standards and are a good fit for the brand. For a prospective franchisee, this means that selling their business isn't solely their decision; Engel & Volkers has a significant say in the process. The franchisee must also ensure any potential buyers sign non-disclosure agreements to protect Engel & Volkers' proprietary information during the negotiation phase.