Are Engel & Volkers franchisees required to pay for services of third parties?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
The ongoing Royalty payment stipulated in Section 14.2 will cover the services provided by Franchisor, except Franchisee will have to pay for services of third parties subject to such third parties' or Franchisor's then current price lists (for example, additional training and GG Magazine advertising, and for the cost of marketing materials).
- 12.1.2 Franchisor will inform Franchisee of any exclusive cooperation arrangements entered into by Franchisor with services companies, e.g., providing for financial services, such as banks, insurance companies or other vendors offering services tailored for use by real estate professionals.
In such cases, Franchisee shall then cooperate exclusively with these services companies in accordance with the terms and conditions of the cooperation agreement between Franchisor and those companies, except in cases where Franchisee has legitimate commercial or financial reasons for refusing such cooperation.
Franchisor will have the right to retain any commissions or event sponsorships earned due to any such cooperation required by Franchisee.
Franchisee may propose service companies or sponsoring vendors to Franchisor for use by Franchisee, subject, however, to Franchisor's prior written approval.
Source: Item 22 — CONTRACTS (FDD page 88)
What This Means (2025 FDD)
According to Engel & Volkers' 2025 Franchise Disclosure Document, franchisees will have to pay for services of third parties. While the ongoing royalty payment covers the services provided by Engel & Volkers, franchisees are responsible for payments to third parties based on their price lists or Engel & Volkers' current price lists. Examples of these services include additional training, GG Magazine advertising, and the cost of marketing materials.
Engel & Volkers also has the right to enter into exclusive cooperation arrangements with service companies, such as banks and insurance companies, that offer services tailored for real estate professionals. In these instances, franchisees are required to cooperate exclusively with these service companies, unless they have legitimate commercial or financial reasons to refuse. However, Engel & Volkers retains the right to keep any commissions or event sponsorships earned due to this required cooperation.
Franchisees can propose their own service companies or sponsoring vendors to Engel & Volkers, but this is subject to Engel & Volkers' prior written approval, which will be based on their business judgment. This means that while franchisees have some autonomy in choosing service providers, Engel & Volkers ultimately controls which third-party services they can use.