What is the Engel & Volkers franchisee's responsibility for financial risk involved in operating the real estate brokerage?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
- 1.5 Independent Investigation: Franchisee has independently investigated the business risks involved and such other matters as Franchisee deems important, including current and potential market conditions and competitive factors and risks, has read Franchisor's Franchise Disclosure Document, and has not relied on any representations not set forth in this Agreement. Aware of the relevant facts, Franchisee desires to enter into this Agreement to obtain a franchise to use the ENGEL & VÖLKERS System to operate a residential real estate brokerage at the Approved Location. Franchisee agrees that it will bear the financial risk involved in operation of the real estate brokerage.
2. Nature of Franchise
Source: Item 22 — CONTRACTS (FDD page 88)
What This Means (2025 FDD)
According to Engel & Volkers' 2025 Franchise Disclosure Document, the franchisee bears the financial risk involved in operating the real estate brokerage. As an independent contractor, the franchisee has full control and responsibility for their franchised business. Engel & Volkers' support, advice, and resources aim to protect the Engel & Volkers system and assist the franchisee, without controlling their decisions or day-to-day operations.
Engel & Volkers franchisees must also promptly pay all taxes, accounts, liabilities, indebtedness, and other obligations incurred in conducting their residential real estate brokerage. This includes income taxes, general business taxes, and any sales, use, or gross receipt taxes on their revenues. Franchisees are responsible for managing their finances and ensuring all financial obligations are met in a timely manner.
This arrangement means that prospective Engel & Volkers franchisees should carefully evaluate their financial capacity and business acumen before investing. They need to be prepared to handle all financial aspects of the business, from managing day-to-day expenses to paying taxes and other obligations. The franchisee's financial success depends on their ability to manage the business effectively and navigate the risks associated with operating a real estate brokerage.