If an Engel & Volkers franchisee breaches the contract, who are they liable to compensate?

According to Engel & Volkers' 2025 Franchise Disclosure Document, if a franchisee breaches the franchise agreement, they may be liable to compensate other Engel & Volkers franchisees who have suffered a loss as a result of the breach. This means that if one franchisee's actions negatively impact another franchisee's business, the breaching franchisee could be required to provide financial compensation to the affected franchisee. This clause aims to protect the overall Engel & Volkers system and ensure that franchisees operate in a way that does not harm their fellow franchisees.

This liability to other franchisees is in addition to any other remedies available to Engel & Volkers itself. The FDD also outlines scenarios where a franchisee may be liable to Engel & Volkers for damages, such as premature termination of the agreement due to the franchisee's breach. In such cases, the franchisee may be required to pay liquidated damages to Engel & Volkers, calculated based on the average monthly royalty fees, national marketing and technology fund contributions, and other fees. This amount is then multiplied by the lesser of 24 months or the number of full calendar months remaining in the term.

This provision highlights the importance of adhering to the franchise agreement and operating within the established Engel & Volkers system. Prospective franchisees should carefully review the franchise agreement to understand their obligations and the potential consequences of breaching the contract. It is also advisable to communicate openly with Engel & Volkers and fellow franchisees to avoid any misunderstandings or actions that could lead to a breach of contract and subsequent liability.