What is the definition of 'Protected Area' for an Engel & Volkers franchisee?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
2.3 Protected Area: Subject to the restrictions set forth in this Agreement, during the Term of this Agreement, if Franchisee is not in default under this Agreement, Franchisee will have exclusivity with regard to its Residential Real Estate Brokerage in an area defined by U.S. postal zip codes (hereinafter called the "Protected Area").
The Protected Area and the geographic scope of the U.S. postal zip codes used to define it will be determined as of the Effective Date.
Franchisee acknowledges that it will not be considered a violation of this Agreement if, after execution of this Agreement, the protection afforded is altered by acts beyond Franchisor's control (e.g., changes in the U.S. postal zip codes).
Should Franchisor grant Franchisee a franchise for multiple physical locations the size of the Protected Area will reflect the parties' intent that Franchisee operate multiple physical locations.
If Franchisee should not find or operate such additional locations as agreed upon, Franchisor may reduce Franchisee's Protected Area to reflect the lower than intended number of physical locations that are operational and Franchisor also may reduce the Protected Area pursuant to Section 20.5 (Optional Remedy). "Exclusivity" means only that no other Engel & Völkers Residential Real Estate Brokerage will be placed in Franchisee's Protected Area by Franchisor so long as Franchisee is not in default under the terms of this Agreement. "Exclusivity" does not mean that Franchisor, its affiliates, or other franchisees are prevented from soliciting clients, marketing their residential real estate brokerage services, or concluding real estate transactions in the Protected Area.
Source: Item 22 — CONTRACTS (FDD page 88)
What This Means (2025 FDD)
According to Engel & Volkers's 2025 Franchise Disclosure Document, a franchisee's 'Protected Area' is defined by U.S. postal zip codes, within which the franchisee has exclusivity for their Residential Real Estate Brokerage. This means Engel & Volkers will not place another Residential Real Estate Brokerage within that area, provided the franchisee is not in default of their agreement. The specific zip codes defining the Protected Area are determined as of the franchise agreement's effective date. The size of the protected area may also reflect the intent of the franchisee to operate multiple physical locations.
However, this exclusivity has limitations. Engel & Volkers, its affiliates, and other franchisees are not prevented from soliciting clients, marketing their residential real estate brokerage services, or concluding real estate transactions within the franchisee's Protected Area. This means that while another Engel & Volkers franchise won't be physically located in the area, they can still compete for business there. The franchisee is also generally allowed to advertise their services throughout the U.S. for properties in the U.S. where they are registered, and internationally with the franchisor's written consent.
Engel & Volkers also retains significant rights within and outside the Protected Area. They can operate or franchise a commercial real estate brokerage inside the Protected Area (except for the franchisee's limited 'Permitted Commercial Services'). Furthermore, Engel & Volkers reserves the right to engage in any business activity and deploy any business concept, using the Engel & Volkers trademarks, both inside and outside the Protected Area, except as specifically restricted in the franchise agreement. The franchisor can also modify the protected area if the franchisee does not operate the agreed upon number of physical locations.