What is the Engel & Volkers franchisee's obligation regarding independent investigation of business risks?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
26.13 Acknowledgements of Franchisee:
Franchisee represents, warrants and acknowledges the following statements to be true and correct as of the date Franchisee signs this Agreement, and to be binding on Franchisee:
26.13.1 Franchisee has conducted an independent investigation of the business contemplated by this Agreement.
26.13.2 Franchisee represents that, as an inducement to Franchisor's entry into this Agreement, it has made no misrepresentations in obtaining this agreement.
26.13.3 Franchisee is aware of the fact that other present or future franchisees may operate under different forms of agreement(s), and consequently that Franchisor's obligations and rights with respect to its various franchisees may differ materially
in certain circumstances. Any such variances Franchisor determines for other franchisees, do not grant Franchisee any rights or entitle Franchisee to request a similar modification under this Agreement.
26.13.4 No representation or statement has been made by Franchisor or its affiliates (or any of its or their officers, directors, managers, employees, agents or salespersons) regarding Franchisee's anticipated income, earnings and growth of the franchised Business or that of the ENGEL & VÖLKERS System, or the viability of the business opportunity being offered under this Agreement.
26.13.5 Before executing this Agreement, Franchisee has had the opportunity to contact all of Franchisor's existing franchisees.
26.13.6 Franchisee has received from Franchisor a copy of Franchisor's franchise disclosure document, together with a copy of all proposed agreements relating to the sale of the franchise, at least fourteen (14) calendar days before the execution of this Agreement or at least fourteen (14) calendar days before the payment by Franchisee to Franchisor any consideration in connection with the sale or proposed sale of the franchise granted by this Agreement.
26.13.7 Franchisee understands that the franchise relationship is an arms' length, commercial business relationship in which each party acts in its own interest.
Source: Item 22 — CONTRACTS (FDD page 88)
What This Means (2025 FDD)
According to Engel & Volkers' 2025 Franchise Disclosure Document, a franchisee acknowledges that they have conducted an independent investigation of the business contemplated by the franchise agreement. This means that before signing the agreement, prospective franchisees are expected to thoroughly examine all aspects of the business opportunity. This includes assessing potential risks, market conditions, and competitive factors.
Engel & Volkers emphasizes that franchisees should not rely on any representations not explicitly stated in the franchise agreement. This reinforces the importance of conducting thorough due diligence and verifying information independently. Franchisees also acknowledge that no guarantees regarding anticipated income, earnings, or growth of the franchised business have been made by Engel & Volkers.
This requirement protects both the franchisee and Engel & Volkers. By acknowledging their independent investigation, the franchisee confirms they are entering the agreement with a clear understanding of the business and its potential risks. This also limits the franchisee's ability to later claim they were misled or uninformed about the business opportunity. It is a common practice in franchising to ensure franchisees conduct their own due diligence to make informed decisions.