What is the Engel & Volkers franchisee's obligation regarding the proposed assignee's compliance with ownership requirements?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
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, if a franchisee wishes to assign any equity or economic interest in the franchise to a third party, the franchisee must ensure that the proposed assignee applies for acceptance as a franchisee. The proposed assignee must demonstrate to Engel & Volkers's satisfaction that they (and their principal owners and guarantors, if the assignee is a business entity) 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.
This means that Engel & Volkers has the right to thoroughly vet any potential buyer of an existing franchise to ensure they meet the brand's standards. The franchisee is responsible for ensuring the proposed assignee cooperates with this vetting process. This protects Engel & Volkers's brand and reputation by ensuring that new franchisees are qualified and capable.
Furthermore, if the assignee is a business entity, all requirements of Engel & Volkers's new Franchise Agreement concerning business entities must be complied with before Engel & Volkers will execute the new Franchise Agreement. The franchisee is also obligated to cover the costs of any investigation that Engel & Volkers deems necessary to conduct on the proposed assignee. This condition ensures that the assignee will adhere to all the current standards and obligations of an Engel & Volkers franchisee.