What is the Engel & Volkers franchisee warranting regarding their financial statements furnished to the franchisor?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
- 24.4 If Franchisee is an entity, Franchisee is duly organized and validly existing, is qualified to do business in each state where Franchisee is or will conduct business, and is duly authorized to execute and deliver this Agreement and perform Franchisee's obligations pursuant to this Agreement; Franchisee does not have any material liabilities, adverse claims, commitments or obligations of any nature as of the date of execution of this Agreement, whether accrued, unliquidated, absolute, contingent or otherwise which are not reflected as liabilities on the balance sheets of Franchisee's current financial statements, which financial statements Franchisee will have furnished to Franchisor prior to the execution of this Agreement;
Source: Item 22 — CONTRACTS (FDD page 88)
What This Means (2025 FDD)
According to Engel & Volkers' 2025 Franchise Disclosure Document, the franchisee is warranting that if they are an entity, they do not have any material liabilities, adverse claims, commitments, or obligations of any nature as of the date of execution of the agreement, whether accrued, unliquidated, absolute, contingent, or otherwise, which are not reflected as liabilities on the balance sheets of the franchisee's current financial statements. These financial statements are those that the franchisee will have furnished to Engel & Volkers before the execution of the agreement.
This means that the franchisee is guaranteeing the accuracy and completeness of the financial information provided to Engel & Volkers. This is a standard practice in franchising, as the franchisor relies on this information to assess the franchisee's financial stability and ability to operate the franchise successfully.
The franchisee is taking on a significant responsibility by warranting the accuracy of their financial statements. If the financial statements are later found to be inaccurate or incomplete, Engel & Volkers could potentially take legal action against the franchisee. Therefore, it is crucial for prospective franchisees to ensure that their financial statements are prepared accurately and completely by a qualified professional before submitting them to Engel & Volkers.