If Engel & Volkers accepts the assignment, what representations and warranties is it entitled to?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisor or its designee accepts the assignment, Franchisor will be entitled to all of the customary representations and warranties given by the seller of assets of a business, including (without limitation) representations and warranties as to ownership, condition of and title to assets, liens and encumbrances on the assets, validity of contracts and agreements, and as to contingent and other liabilities affecting the assets.
Any dispute regarding the value of all or any part of the assets or rights proposed to be assigned and/or the consideration proposed to be paid or payable to Franchisee or any third party in connection with the proposed assignment shall be determined by a reputable independent appraiser Franchisor selects, and Franchisee and Franchisor equally share the expense of, whose determination will be final and binding on all parties.
Franchisee expressly understands and agrees that nothing in the offer which is the subject of the Offer to Franchisor may contain any provision or condition the effect of which would be to increase the cost to Franchisor, or otherwise change the economic or other material terms imposed on Franchisor, as a result of Franchisor's substitution for
the proposed assignee, or as a consequence of compliance with the procedures set forth herein regarding Franchisor's right of first refusal.
22.5.4 If Franchisee is a business entity and a partial transfer is proposed through the assignment or redemption of more than 25% of such entity's ownership interests other than to any of such entity's co-owners, then Franchisor or its designee will have the option to purchase not only the interests being transferred but also all remaining interests, so that Franchisor's resulting ownership will be 100% of such business entity.
The price of these remaining interests will be proportionate to the price of the interests initially being offered.
- 22.5.5 Franchisor's credit will be considered at least equal to the credit of any proposed assignee.
Franchisor may substitute cash for the fair market value of any other form of payment proposed in the Offer.
Source: Item 22 — CONTRACTS (FDD page 88)
What This Means (2025 FDD)
According to Engel & Volkers's 2025 Franchise Disclosure Document, if Engel & Volkers or its designee accepts the assignment of a franchise, Engel & Volkers is entitled to all customary representations and warranties given by the seller of a business's assets. These include, but are not limited to, representations and warranties regarding ownership, the condition of and title to assets, any liens and encumbrances on the assets, the validity of contracts and agreements, and any contingent and other liabilities affecting the assets.
Any dispute over the value of the assets or rights proposed to be assigned, or the consideration to be paid to the franchisee or any third party, will be determined by a reputable independent appraiser selected by Engel & Volkers. The expense of the appraiser is equally shared between Engel & Volkers and the franchisee, and the appraiser's determination is final and binding on all parties involved.
The franchisee also understands and agrees that the offer presented to Engel & Volkers cannot contain any provision or condition that would increase the cost to Engel & Volkers or change the economic or other material terms imposed on Engel & Volkers as a result of Engel & Volkers substituting for the proposed assignee or complying with the procedures regarding Engel & Volkers's right of first refusal. If the franchisee is a business entity and proposes a partial transfer through the assignment or redemption of more than 25% of the entity's ownership interests (other than to co-owners), Engel & Volkers or its designee has the option to purchase not only the interests being transferred but also all remaining interests, resulting in Engel & Volkers owning 100% of the business entity. The price for these remaining interests will be proportionate to the price of the interests initially offered. Engel & Volkers's credit will be considered at least equal to the credit of any proposed assignee, and Engel & Volkers may substitute cash for the fair market value of any other form of payment proposed in the offer.