What is the definition of 'under contract for purchase' for an Engel & Volkers franchisee, as defined in 14.2.1?

According to Engel & Volkers' 2025 Franchise Disclosure Document, the term "under contract for purchase" is specifically defined in Section 14 of the agreement. For royalty payment purposes, a property is considered "under contract for purchase" when there is a fully executed sale or escrow agreement in place. This definition is important because Engel & Volkers franchisees are obligated to pay royalties on closings that occur even after the termination, expiration, or transfer of their franchise agreement if the properties were already "under contract for purchase" at the time of such termination, expiration, or transfer. This obligation extends for six months following the end of the agreement.

This definition ensures that Engel & Volkers receives royalties on deals that the franchisee initiated during the term of the agreement, even if the final closing occurs later. It also incentivizes franchisees to finalize transactions before considering termination or transfer. The franchisee is responsible for providing documentation of any "Exempted Transactions" (properties under contract before the Payment Start Date) to Engel & Volkers within two business days before the Payment Start Date to avoid paying royalties on those transactions.

Failure to provide timely documentation for exempted transactions means the Engel & Volkers franchisee will have to pay royalties on the gross revenues received from those transactions. This clause highlights the importance of maintaining accurate records and adhering to the reporting requirements outlined in the franchise agreement. The royalty rate can also increase to six percent (6%) on all gross revenues if the franchisee fails to report all gross revenues or pay fees when due, further emphasizing the need for compliance.