Will failure to use Engel & Volkers services affect the amount of Royalty payments?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
5.1 Services: Franchisor will provide the following services to Franchisee under this Agreement:
5.1.1 Access to the ENGEL & VÖLKERS international network;
5.1.2 Training courses for Franchisee in accordance with Section 9;
5.1.3 Administrative, technical, and marketing support in connection with the use of the ENGEL & VÖLKERS System;
5.1.4 Access to the System Documentation, which contain Franchisor's recommended methods, specifications, procedures, and products for operation of Franchisee's Residential Real Estate Brokerage under the ENGEL & VÖLKERS System.
Franchisor reserves the right to make changes in the System Documentation from time to time;
5.1.5 Organizing exchanges of information and experience among franchisees;
5.1.6 Make Franchisor's proprietary Integrated Product Suite available and integrate Franchisee into the ENGEL & VÖLKERS information technology network; and
5.1.7 Optional programs, designations and services that Franchisor may develop from time to time and make available to qualifying franchisees.
5.2 Delegation of Services: Franchisor shall be entitled to delegate performance of services to be provided under this Agreement to qualified third parties.
The ongoing Royalty payment stipulated in Section 14.2 will cover the services provided by Franchisor, except Franchisee will have to pay for services of third parties subject to such third parties' or Franchisor's then current price lists (for example, additional training and GG Magazine advertising, and for the cost of marketing materials).
Failure on Franchisee's part to avail itself of any services shall not affect the amount of the Royalty payments.
Source: Item 22 — CONTRACTS (FDD page 88)
What This Means (2025 FDD)
According to Engel & Volkers's 2025 Franchise Disclosure Document, a franchisee's failure to utilize the services offered by Engel & Volkers will not affect the amount of royalty payments owed. The ongoing royalty payments, as stipulated in Section 14.2, are designed to cover the services provided by Engel & Volkers. However, franchisees are responsible for paying for third-party services based on the third parties' or Engel & Volkers' current price lists, such as additional training and GG Magazine advertising, as well as the cost of marketing materials.
Engel & Volkers offers various services to franchisees, including access to their international network, training courses, administrative, technical, and marketing support, access to System Documentation, information exchanges among franchisees, access to their Integrated Product Suite, and optional programs. Engel & Volkers retains the right to modify the System Documentation as needed and can delegate service performance to qualified third parties.
This means that an Engel & Volkers franchisee must still pay the full royalty fee, regardless of whether they take advantage of all the services available to them. However, if a franchisee fails to report all gross revenues or pay all fees when due, the royalty rate on all of the franchisee's gross revenues will be six percent (6%).