Can an Engel & Volkers franchisee transfer the right to operate a limited purpose sales location?
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 the 2025 Engel & Volkers Franchise Disclosure Document, a franchisee's ability to assign or transfer any equity or economic interest in the franchise, its assets, or the right to use the Engel & Volkers System to a third party is subject to certain conditions. The franchisee must first make their best efforts to prevent any unauthorized disclosure of proprietary information by having third parties sign non-disclosure agreements acceptable to Engel & Volkers. The franchisee must also immediately inform Engel & Volkers of any unauthorized disclosure or access and provide copies of the non-disclosure agreements upon request.
Engel & Volkers has the right of first refusal regarding the proposed sale, transfer, or assignment. If Engel & Volkers chooses not to exercise this right, they will not unreasonably withhold consent to the transfer. However, Engel & Volkers can impose certain requirements for granting consent.
These requirements include ensuring that the proposed assignee applies for acceptance as a franchisee and demonstrates that they possess the necessary skills, qualifications, financial condition, background, reputation, economic resources, education, managerial and business experience, moral character, credit rating, and ability to fulfill the obligations under the Franchise Agreement. The franchisee is responsible for covering the costs of any investigation that Engel & Volkers deems necessary to conduct.
In summary, while an Engel & Volkers franchisee can potentially transfer their rights, including those related to a Limited Purpose Sales Location, the process involves significant franchisor oversight and approval. The prospective buyer must meet Engel & Volkers' standards, and the franchisor retains considerable control over the transfer process.