What happens if an Engel & Volkers franchisee breaches the non-competition provisions?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
20.3.6 commits a breach of the non-competition provisions set forth in Section 16 or one of the Principals commits a breach of the Confidentiality Agreement and Covenant Not To Compete;
17.2 Liability to Other Franchisees: Should Franchisee commit a breach of contract by acting contrary to the foregoing provisions, Franchisee shall be liable for payment of compensation to other ENGEL & VÖLKERS System franchisees who may thereby have suffered loss in individual cases.
26.1 Governing Law: This Agreement; all relations between the parties hereto (and all relations with any third party beneficiary hereto); and, any and all disputes between Franchisee and its affiliates, owners, management, employees, or contractors, on the one hand, and Franchisor and/or any other Indemnified Parties, on the other hand, whether such dispute sounds in law, equity or otherwise, is to be exclusively construed in accordance with and/or governed by (as applicable) the law of the State of New York without recourse to New York (or any other) choice of law or conflicts of law principles.
If, however, any provision of this Agreement would not be enforceable under the laws of New York, and if the franchised ENGEL & VÖLKERS Business is located outside of New York and the provision would be enforceable under the laws of the state in which the franchised ENGEL & VÖLKERS Business is located, then the provision (and only that provision) will be interpreted and construed under the laws of that state.
Source: Item 22 — CONTRACTS (FDD page 88)
What This Means (2025 FDD)
According to Engel & Volkers' 2025 Franchise Disclosure Document, a franchisee who breaches the non-competition provisions faces specific repercussions. The franchise agreement can be terminated if the franchisee violates the non-competition terms outlined in Section 16. This breach is explicitly listed as grounds for termination.
In addition to potential termination, the franchisee may be liable for compensation to other Engel & Volkers franchisees who suffered losses due to the breach. This means that if a franchisee's competitive actions negatively impact another franchisee's business, the breaching franchisee could be required to provide financial compensation to offset those losses.
The FDD also states that New York law governs the franchise agreement. However, if the Engel & Volkers business is located outside of New York, and a provision of the agreement would be enforceable under the laws of the state in which the franchised business is located, then that provision will be interpreted and construed under the laws of that state.