Does the Engel & Volkers franchise agreement specify the amount of liquidated damages?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
The liquidated damages are typically an amount equal to the average monthly Royalty fees, National Marketing and Technology Fund contribution and any other fees due and payable under the Franchise Agreement from opening to termination, multiplied by the lesser of 24 months or the number of full calendar months left on the term.
If the franchise agreement is terminated before you started operating or before Royalty fees, National Marketing and Technology Fund contribution are due under the franchise agreement, the liquidated damages will instead be an amount equal to what the combined monthly average of Royalty fees, National Marketing and Technology Fund contributions, and any other fees due and payable would have been, had the Agreement not been terminated, multiplied by 24 months. The Royalty fees, National Marketing and Technology Fund contribution and other fees that the liquidated damages are based on in that situation will be calculated on the monthly average of the gross revenue you (or your owners) directly or indirectly earned during the 12 month period immediately before the effective date of the franchise agreement from providing residential real estate brokerage services, including commissions, referral fees, marketing and technology fees and payments, as such earnings information was provided or verified by you. If you did not previously operate a residential real estate brokerage the liquidated damages will be an amount equal to the minimum annual Royalty for 24 months and any other fees due and payable.
Source: Item 6 — OTHER FEES (FDD pages 22–30)
What This Means (2025 FDD)
According to Engel & Volkers's 2025 Franchise Disclosure Document, the liquidated damages are specified in Item 6. If the franchise agreement is terminated, the liquidated damages are typically equal to the average monthly Royalty fees, National Marketing and Technology Fund contribution, and any other fees due. This average is calculated from the time the franchise opened until termination, and then multiplied by either 24 months or the number of full calendar months remaining on the term, whichever is less.
If the termination occurs before the Engel & Volkers franchisee starts operating or before Royalty fees and National Marketing and Technology Fund contributions are due, the liquidated damages will be calculated differently. In this case, it will be equal to what the combined monthly average of Royalty fees, National Marketing and Technology Fund contributions, and any other fees would have been, had the agreement not been terminated, multiplied by 24 months. The Royalty fees, National Marketing and Technology Fund contribution and other fees that the liquidated damages are based on in that situation will be calculated on the monthly average of the gross revenue you (or your owners) directly or indirectly earned during the 12 month period immediately before the effective date of the franchise agreement from providing residential real estate brokerage services, including commissions, referral fees, marketing and technology fees and payments, as such earnings information was provided or verified by you.
If the Engel & Volkers franchisee did not previously operate a residential real estate brokerage, the liquidated damages will be an amount equal to the minimum annual Royalty for 24 months and any other fees due and payable. This means that the liquidated damages can vary significantly based on when the termination occurs and the franchisee's operating history. The FDD also indicates in the table that liquidated damages are payable upon demand if the Franchise Agreement is terminated for your breach.