What happens if a receiver is appointed for the assets of an Engel & Volkers franchisee?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
Bankruptcy Code or any other applicable federal or state bankruptcy, insolvency, reorganization, receivership or other similar law now or hereafter in effect, or consent to the entry for an order for relief in an involuntary proceeding or to the conversion of an involuntary proceeding to a voluntary proceeding, under any such law; a bill in equity or other proceeding for the appointment of a receiver or other custodian of Franchisee, the franchised Business, or any affiliate or Guarantor of the franchised Business, or the assets of any of them, is filed and consented to by Franchisee; a receiver or other custodian (permanent or temporary) of all or part of the assets or property of Franchisee, the franchised Business and any affiliate or Guarantor of the franchised Business is appointed by any court of competent jurisdiction; proceedings for a composition with creditors under any federal or state law are instituted by or against Franchisee, the franchised Business or any affiliate or Guarantor thereof; Franchisee, any affiliate of Franchisee or any Guarantor are dissolved; execution is levied against Franchisee, the franchised Business, any affiliate or Guarantor thereof and/or the property of any of the foregoing; the property of the franchised Business is sold after levy thereon by any governmental body or agency, sheriff, marshal or other person authorized under federal, state and/or local law; or, if Franchisee is a business entity, its governing body adopts any resolution or otherwise authorizes action to approve any of the foregoing activities.
- 20.3 Termination by Franchisor Without Opportunity to Cure: Franchisee shall be deemed to be in default under this Agreement, and Franchisor may, at its option, terminate this Agreement and all rights granted herein effective immediately or reduce or eliminate the Protected Area by written notice to Franchisee, without giving Franchisee an opportunity to cure the default, if Franchisee either:
Source: Item 22 — CONTRACTS (FDD page 88)
What This Means (2025 FDD)
According to Engel & Volkers' 2025 Franchise Disclosure Document, if a receiver or other custodian is appointed by a court of competent jurisdiction for all or part of the assets or property of the franchisee, the franchised business, or any affiliate or guarantor of the franchised business, Engel & Volkers has grounds to terminate the franchise agreement. This termination can occur without providing the franchisee an opportunity to remedy the situation.
This provision means that if a franchisee's business encounters severe financial difficulties leading to the appointment of a receiver to manage assets, Engel & Volkers can immediately terminate the franchise agreement. This action protects Engel & Volkers by disassociating the brand from a financially unstable business. The franchisee loses all rights granted under the agreement, which can include the right to operate the Engel & Volkers business.
This type of clause is relatively standard in franchise agreements, as franchisors typically want to avoid being linked to businesses facing receivership or bankruptcy. Prospective Engel & Volkers franchisees should understand that financial stability is critical, and any event leading to the appointment of a receiver could result in the immediate loss of their franchise.