What is the effect of any provision in the Offer that increases the cost to Engel & Volkers?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisor may adapt the ENGEL & VÖLKERS System to the peculiarities of a particular market area or its circumstances, business potential, population, existing business practices, any other condition which Franchisor considers important to the successful operation of Franchisee's business, or due to other events or other nonarbitrary distinctions, and whether or not they arise to the level of a force majeure event and whether or not they are foreseeable may Franchisee understands and agrees that adaptations and modifications to the ENGEL & VÖLKERS System may obligate Franchisee to invest additional capital or incur higher operating costs.
Notwithstanding anything to the contrary herein, any fee in this Agreement that is set forth as a fixed dollar amount may be adjusted by Franchisor by up to 10% annually to adjust for inflation, the scope of services provided in exchange for the fee, and other cost increases. For the avoidance of doubt, any increase permitted by this Section does not impact any fees expressed as a percentage.
Franchisee will purchase, and at all times during the Term maintain in full force and effect, at Franchisee's expense, customary insurance coverage (e.g., fire, burglary, theft, damage from piped water, storm, financial liability, business interruption arising from any one of the foregoing causes, employee honesty and liability, professional liability/errors and omissions, cyber liability/data breach and general commercial liability insurance) and such other forms of insurance as required by law or by Franchisor, in such minimum amounts as required by law or Franchisor from time to time, but not less than US $2 million for professional liability insurance per each occurrence or accident and not less than US $2 million per each occurrence or accident for any other insurance, and with such approved insurance companies as shall be required by Franchisor prior to commencing business operations and maintain this coverage until the expiration or termination of this Agreement.
Franchisee agrees that Franchisor may periodically add to, modify or delete the types and amounts of insurance coverage which Franchisee is required to maintain under this Agreement, and all features and elements thereof, by written notice to Franchisee (through a supplement to the System Documentation or otherwise).
Source: Item 22 — CONTRACTS (FDD page 88)
What This Means (2025 FDD)
According to Engel & Volkers' 2025 Franchise Disclosure Document, the franchisor may adapt the Engel & Volkers system to suit specific market areas, business potential, population, existing business practices, or any other condition they deem important for the franchisee's success. These adaptations and modifications to the Engel & Volkers system may require the franchisee to invest additional capital or incur higher operating costs. This means that as a franchisee, you may need to spend more money than initially planned to keep up with changes made to the system. These changes can be influenced by various factors, including market conditions and business practices.
Engel & Volkers may also adjust fixed dollar amount fees by up to 10% annually to account for inflation, the scope of services provided, and other cost increases. However, this adjustment does not affect fees expressed as a percentage. This means that some of the fixed fees you pay to Engel & Volkers could increase each year, but only by a limited amount. It is important to factor in potential fee increases when budgeting for your franchise.
Furthermore, Engel & Volkers franchisees are required to purchase and maintain customary insurance coverage, such as fire, burglary, theft, and liability insurance, at their own expense. The franchisor can periodically add to, modify, or delete the types and amounts of insurance coverage required. This means that franchisees need to be prepared for potential changes in insurance requirements, which could lead to increased costs. Franchisees should regularly review their insurance policies and communicate with Engel & Volkers to stay informed about any changes to the required coverage.