How does the Engel & Volkers franchise agreement address the transfer of rights and obligations under the agreement?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
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- 21.3 Return of Property: Upon termination or expiration of this Agreement, Franchisee must return all copies of the System Documentation (including any printed copies of electronic transmissions) and all documents relating to the ENGEL & VÖLKERS System and the properties covered by this Agreement and all other articles owned by Franchisor without delay, except that Franchisee may keep a copy of this Agreement, any correspondence between the parties, and any other documents required by Franchisee for fulfillment of its legal obligations, except for any System Documentation.
22. Transfer of Rights and Obligations under this Agreement
22.1 Assignment by Franchisor:
Franchisor has the right to assign all of its rights and privileges under this Agreement to any person or business entity. If Franchisor assigns this Agreement, Franchisee expressly agrees that immediately upon and following such assignment, Franchisor will no longer have any obligation - - directly, indirectly or contingently - - to perform or fulfill the duties or obligations imposed upon the "Franchisor" as defined hereunder. Instead, all such duties
and obligations will be performed solely by Franchisor's designated assignee, and Franchisee will never assert, contend or complain otherwise.
Franchisee agrees and affirms that Franchisor may undertake a refinancing, recapitalization, securitization, leveraged buyout or other economic or financial restructuring. Franchisee expressly waives any and all claims, demands or damages arising from or related to such activities. Franchisee also agrees that Franchisor may purchase, merge, acquire, be acquired by or affiliate with an existing competitive or non-competitive franchise or non-franchise network, chain or any other business regardless of the location of that other business' facilities, and that following such activity Franchisor may operate, franchise or license those other businesses and/or facilities under any names or marks, including the Trademarks, regardless of the location of these businesses and/or facilities, which may be in the Protected Area.
22.2 Assignment by Franchisee:
Franchisee's rights and obligations under this Agreement are personal because Franchisor has entered into this Agreement in reliance on and in consideration of Franchisee's singular personal trust, confidentiality, skill and qualifications (or, if Franchisee is an entity, the personal trust, confidentiality, skill and qualifications of its Principals and key employees). Therefore, except as provided below, neither Franchisee's interest in this Agreement, its rights, privileges or obligations under this Agreement, the franchised Business, nor any interest in the franchised Business, or a business entity franchisee (including any capital stock, membership, partnership or proprietary interest of Franchisee or anyone who controls Franchisee), or the control of management or day-to-day decisions of the franchised Business, may be assigned, sold, transferred, obtained, shared, reconsidered, sublicensed or divided, voluntarily or involuntarily, directly or indirectly, in one or a series of related transactions, by operation of law or otherwise (each, an "assignment"), without first obtaining Franchisor's written consent and, where applicable, complying with Franchisor's right of first refusal, each as provided in this Section 22. Any assignment in violation of this Section 22 will be null, void and of no effect. In addition, Franchisee must not sub-franchise, sub-license, subcontract, share or divide or partition rights under this Agreement without Franchisor's prior written consent. Franchisor may in its absolute discretion withhold such consent.
22.3 Assignment By Franchisee – Sale To Third Party
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.
If Franchisor does not elect to exercise its right of first refusal (as provided in Section 22.5 below), then Franchisor will not unreasonably withhold consent to Franchisee's sale, transfer or assignment of any interest in Franchisee (if Franchisee is a business entity), the
franchise conveyed by this Agreement and Franchisee's right to use the ENGEL & VÖLKERS System, or any interest in any of these, to a third party.
Source: Item 22 — CONTRACTS (FDD page 88)
What This Means (2025 FDD)
According to Engel & Volkers' 2025 Franchise Disclosure Document, the franchise agreement addresses the transfer of rights and obligations, outlining conditions for both the franchisor and franchisee. Engel & Volkers has the right to assign all of its rights and privileges under the agreement to any person or business entity. If Engel & Volkers assigns the agreement, it will no longer have any obligation to perform the duties outlined in the agreement; instead, the assignee will assume all duties and obligations. The franchisee agrees not to claim otherwise.
If a franchisee wishes to transfer any equity or economic interest in the franchise to a third party, they must use their best efforts to prevent any unauthorized disclosure of proprietary information, including having third parties sign nondisclosure agreements acceptable to Engel & Volkers. The franchisee must also immediately advise Engel & Volkers of any unauthorized disclosure or access and provide copies of all non-disclosure agreements upon request. If Engel & Volkers does not exercise its right of first refusal, it will not unreasonably withhold consent to the franchisee's sale, transfer, or assignment of any interest in the franchise to a third party.
Engel & Volkers may impose certain conditions to granting consent to the franchisee's proposed sale, assignment, or transfer. The proposed assignee must apply for acceptance as a franchisee and demonstrate that they possess the skills, qualifications, financial condition, background, history, reputation, economic resources, education, managerial and business experience, moral character, credit rating, and ability to assume the duties and obligations under the agreement. The franchisee must pay the costs of any investigation required by Engel & Volkers. The franchisee, its owners, and guarantors, along with the assignee and their owners and guarantors, must execute Engel & Volkers' then-standard form of General Release. The franchisee must furnish Engel & Volkers with a copy of any proposed contract of assignment and, following execution, furnish a copy of the executed contract. The franchisee must pay Engel & Volkers a transfer fee of $2,500 to compensate for its legal, accounting, and other expenses, though this fee does not apply to mortgages or other usual financing encumbrances. Neither the proposed assignee nor any of its owners or affiliates can directly or indirectly own, operate, or have any interest in a competitive business to Engel & Volkers.
The franchisee's obligation to indemnify and hold harmless Engel & Volkers extends to liabilities arising from any statements, representations, or warranties that the franchisee may give to or receive from any proposed assignee, and any claim that the franchisee or its assignee engaged in fraud, deceit, violation of franchise laws, or other illegality in connection with the assignment. Engel & Volkers' consent to any assignment transaction does not constitute a waiver of any claims against the franchisee by Engel & Volkers or its affiliates.