What must an Engel & Volkers franchisee do regarding financing and supply sources before assigning the franchise?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
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. 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, cr
Source: Item 22 — CONTRACTS (FDD page 88)
What This Means (2025 FDD)
The 2025 Engel & Volkers Franchise Disclosure Document outlines several requirements a franchisee must meet before assigning their franchise to a third party. While the document details numerous conditions related to the assignee's qualifications and the franchisor's approval process, it does not specifically address requirements related to the franchisee's financing or supply sources.
However, the FDD does state that the proposed assignee must demonstrate to Engel & Volkers' satisfaction that they possess the financial condition and economic resources to assume the duties and obligations under the Franchise Agreement. This implies that the assignee's ability to manage the financial aspects of the franchise, including any existing financing arrangements, will be a factor in the franchisor's decision. Additionally, the franchisee must furnish Engel & Volkers with a copy of any proposed contract of assignment and related agreements.
Because the FDD does not explicitly state requirements regarding financing and supply sources, a prospective franchisee should directly ask Engel & Volkers about any specific expectations or requirements related to these aspects of the business before assigning the franchise. This will help ensure a smooth and transparent transfer process.