What is the Engel & Volkers franchisee's obligation regarding the proposed assignee's compliance with restrictions relative to involvement in a competitive business?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
- 22.3.17 That neither the proposed assignee nor any of its owners or affiliates directly or indirectly owns, operates or has any interest in, or has a material business relationship with, a competitive business to ENGEL & VÖLKERS.
Franchisee expressly agrees that its obligation to indemnify and hold harmless Franchisor and the other indemnitees under Section 17 of this Agreement extends to and embraces liabilities arising from or relating to, directly or indirectly, any statements, representations or warranties that Franchisee may give to or receive from any proposed assignee and/or any claim that Franchisee (and, if Franchisee is a business entity, its owners, management or staff members) or its assignee engaged in fraud, deceit, violation of franchise laws or other illegality in connection with the negotiation or consummation of the assignment. As with all other indemnification obligations set forth in this Agreement, this specific indemnification obligation will survive the termination or expiration of this Agreement.
Source: Item 22 — CONTRACTS (FDD page 88)
What This Means (2025 FDD)
According to Engel & Volkers' 2025 Franchise Disclosure Document, if a franchisee wishes to sell their franchise to a third party, Engel & Volkers will not unreasonably withhold consent to the sale, transfer, or assignment of any interest in the franchise to a third party. However, Engel & Volkers can impose certain conditions.
One of these conditions is that neither the proposed assignee nor any of its owners or affiliates can directly or indirectly own, operate, have any interest in, or have a material business relationship with a business that competes with Engel & Volkers. This means that the potential buyer of the franchise must not be involved in any competitive real estate business.
This requirement ensures that the new franchisee will be fully committed to the Engel & Volkers system and will not divert resources or knowledge to a competing business. It protects Engel & Volkers' market position and proprietary information. The franchisee also agrees to indemnify Engel & Volkers against liabilities arising from any statements or warranties they give to the proposed assignee, or any claims of fraud or illegal activity during the assignment negotiation.