What happens to the royalty rate for Engel & Volkers at the start of each calendar year?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
the Payment Start Date (as defined hereinafter) not fall on January 1 of a calendar year or should this Agreement terminate or expire on a date other than December 31 of a calendar year during the Term, the Minimum Annual Royalty will be determined pro rata temporis the number of full calendar months in that calendar year from the Payment Start Date through the end of the cale
Source: Item 22 — CONTRACTS (FDD page 88)
What This Means (2025 FDD)
According to Engel & Volkers's 2025 Franchise Disclosure Document, on January 1st of each calendar year, the calculation of a franchisee's gross revenues starts anew from $0. This means that the royalty rate is reset to six percent (6%) on all gross revenues.
As the Engel & Volkers franchisee generates revenue throughout the year, the royalty rate may decrease according to a schedule of tiers. The franchisee must meet the gross revenue targets for each tier to reduce their royalties for that calendar year.
For example, if an Engel & Volkers franchisee had gross revenues of $2,500,000 in one calendar year, they would pay 6% royalty on the first $1,000,000, 5.5% on the next $1,000,000, and 5% on the remaining $500,000. However, on January 1 of the following year, the royalty rate would reset to 6% on all gross revenues until the franchisee again reaches the thresholds for the lower tiers.