If an Engel & Volkers franchisee fails to make a payment, what is the obligation of the guarantor?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
Examples of material breaches of Franchisee's obligations under this Agreement include failure to timely pay any amounts due when payable and failure to timely submit reports required hereunder.
20.6 Franchisee's Failure to Pay: Franchisee's failure to make payments of any ongoing Royalties or other money due and owing to Franchisor, after Franchisee receives notice of the default from Franchisor granting an opportunity to cure, will be considered Franchisee's willful and wrongful breach under this Agreement and Franchisee's decision to reject and terminate this Agreement.
20.7 Notice Required By Law: If any valid, applicable law or regulation of a competent governmental authority with jurisdiction over this Agreement or the parties to this Agreement limits Franchisor's rights of termination under this Agreement or requires longer notice or cure periods than those set forth above, then this Agreement will be considered modified to conform to the minimum notice, cure periods or restrictions upon termination required by the laws and regulations.
Franchisor will not, however, be precluded from contesting the validity, enforceability or application of the laws or regulations in any action, proceeding, hearing or dispute relating to this Agreement or the termination of this Agreement.
21. Consequences of Expiration or Termination of Agreement
- 21.1 Cessation of Business Operation: On expiration or termination of this Agreement for any reason, Franchisee will do the following in regard to the franchised Business:
- 21.1.1 immediately pay any amounts due and outstanding under this Agreement, plus any interest owed. If such sums are not paid within ten (10) days of the effective date of expiration or termination, interest will accrue, calculated as provided herein. Notwithstanding the foregoing sentence, Royalty payments on Gross Revenue
Source: Item 22 — CONTRACTS (FDD page 88)
What This Means (2025 FDD)
Based on the 2025 Engel & Volkers Franchise Disclosure Document, the document outlines the consequences and potential actions Engel & Volkers can take if a franchisee fails to make timely payments. Specifically, if a franchisee fails to pay any ongoing royalties or other money due, and they receive notice of the default from Engel & Volkers with an opportunity to cure, this will be considered a willful and wrongful breach of the agreement, essentially a rejection and termination of the agreement by the franchisee. Engel & Volkers may also withhold access to the Integrated Product Suite and other services until payments are current or rescind negotiated terms, such as reducing the Protected Area.
Engel & Volkers requires the franchisee to immediately pay any outstanding amounts plus interest upon termination of the agreement. If these sums are not paid within ten days of termination, interest will continue to accrue. Franchisees must also cease using the Engel & Volkers system, including trademarks and confidential information. Furthermore, the franchisee is responsible for all losses and expenses incurred by Engel & Volkers as a result of the default or termination, including damages, costs, legal fees, and expert fees.
The FDD does not specifically mention the obligations of a guarantor if the franchisee fails to make a payment. It is important for a prospective franchisee to understand the full scope of their financial obligations and the potential ramifications of failing to meet them.
Therefore, a prospective Engel & Volkers franchisee should seek clarification from the franchisor regarding the obligations of a guarantor in the event of payment default. This information is crucial for anyone considering guaranteeing the financial obligations of an Engel & Volkers franchisee to fully understand the risks involved.