If Engel & Volkers accepts the assignment, what representations and warranties are they 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.
Source: Item 22 — CONTRACTS (FDD page 88)
What This Means (2025 FDD)
According to Engel & Volkers' 2025 Franchise Disclosure Document, if Engel & Volkers or its designee accepts the assignment of a franchise, they are entitled to all customary representations and warranties given by the seller of a business's assets. This includes 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 or other liabilities affecting the assets.
This means that Engel & Volkers, upon accepting an assignment, receives assurances from the selling franchisee about the business's assets and legal standing. These assurances protect Engel & Volkers from hidden liabilities or misrepresentations about the business they are acquiring. For example, the representations and warranties would cover whether the seller actually owns the assets they are selling, whether those assets are in good working order, and whether there are any outstanding legal claims against the business.
Furthermore, any dispute regarding the value of the assets or the consideration to be paid will be determined by an independent appraiser selected by Engel & Volkers. The expense for this appraiser is equally shared between Engel & Volkers and the franchisee, and the appraiser's determination is final and binding on all parties. This ensures a fair and objective valuation process, protecting both the franchisee and Engel & Volkers from potential disputes over asset values during the assignment.