Is an Engel & Volkers franchise assignment prohibited if the proposed assignee or its owners/affiliates have a material business relationship with a competitive business?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
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. Franchisee agrees that it will not be unreasonable for Franchisor to impose, among other requirements, the following conditions to granting consent to Franchisee's proposed sale, assignment or transfer of any of the foregoing:
- 22.3.1 That the proposed assignee (meaning individual or business entity which, after the proposed assignment, will be the franchisee under this Agreement or under any successor/renewal agreement) applies to Franchisor for acceptance as a franchisee and demonstrates to Franchisor's satisfaction that the proposed assignee (and, if it is a business entity, each and every Principal owner and guarantor of the proposed assignee) possesses the skills, qualifications, financial condition, background and history, reputation, economic resources, education, managerial and business experience, moral character, credit rating and ability to assume the duties and obligations under this Agreement or any successor agreement.
Franchisee must pay the costs of any investigation required to be conducted by Franchisor.
Source: Item 22 — CONTRACTS (FDD page 88)
What This Means (2025 FDD)
Based on the 2025 Engel & Volkers Franchise Disclosure Document, the franchisor has the right to reasonably withhold consent to a Franchisee's sale, transfer, or assignment of any interest in the Franchisee. The proposed assignee must apply to Engel & Volkers for acceptance as a franchisee and demonstrate that they possess the skills, qualifications, financial condition, background and history, reputation, economic resources, education, managerial and business experience, moral character, credit rating and ability to assume the duties and obligations under the Franchise Agreement.
Engel & Volkers will likely investigate the proposed assignee to ensure they meet the brand's standards. The franchisee is responsible for covering the costs of this investigation. This process ensures that any new franchisee taking over an existing location or territory is well-qualified and capable of upholding the Engel & Volkers brand reputation and operational standards.
While the FDD states the proposed assignee must meet certain qualifications, it does not specifically state that a franchise assignment is prohibited if the proposed assignee or its owners/affiliates have a material business relationship with a competitive business. To determine whether Engel & Volkers would approve an assignment to a proposed assignee with a competitive business relationship, a prospective franchisee should seek clarification from the franchisor.