What is the Engel & Volkers franchisee required to do when offering the assignment of any assets of its business to a third party?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
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. 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)
According to Engel & Volkers's 2025 Franchise Disclosure Document, a franchisee who wishes to solicit, offer, or discuss the assignment of any equity or economic interest in the franchise, or the assets of its business, to a third party must take specific actions. The franchisee is obligated to use its best efforts and employ reasonable security measures to prevent unauthorized disclosure of proprietary information. This includes ensuring that any third parties who receive confidential information sign nondisclosure agreements acceptable to Engel & Volkers. The franchisee must also immediately inform Engel & Volkers of any unauthorized disclosure or access to this information and provide copies of all nondisclosure agreements upon request.
Engel & Volkers retains the right of first refusal for any proposed sale, transfer, or assignment. If Engel & Volkers chooses not to exercise this right, they will not unreasonably withhold consent to the franchisee's proposed transaction. However, Engel & Volkers can impose certain conditions before granting consent. These conditions include ensuring that the proposed assignee applies for acceptance as a franchisee and demonstrates that they possess the necessary skills, qualifications, financial condition, background, history, reputation, economic resources, education, managerial and business experience, moral character, credit rating, and ability to fulfill the obligations under the Franchise Agreement.
The Engel & Volkers franchisee is responsible for covering the costs of any investigation that Engel & Volkers deems necessary to conduct in assessing the proposed assignee. This requirement ensures that Engel & Volkers maintains control over who enters their franchise system and that any new franchisee meets their standards. It also protects the confidentiality of proprietary information and ensures a smooth transition if the franchise changes hands.