If an Engel & Volkers franchisee's affiliate is deemed insolvent, what happens to the Franchise Agreement?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Franchise Agreement | Summary |
|---|---|---|
| a. Length of the franchise | §19.1 | 10 years |
| term | ||
| b. Renewal or extension of | §§19.2, 19.3 | 1 period of 10 years |
| the term | ||
| c. Requirements for franchisee to renew or extend | §§19.2, 19.3 | Serve written notice on us at least 6 mopnths before expiration of current term, comply with all provisions of Franchise Agreement and other agreements with us, sign the then current form of Franchise Agreement, sign a general release and pay a renewal fee. You may be asked to sign a contract with materially different terms and conditions than your original contract. |
| d. Termination by | §20.1 | You may not terminate or cancel the Franchise |
| franchisee | Agreement. This provision is subject to state law. | |
| e. Termination by franchisor without cause | §§4.8 | We can terminate upon written notice to you if we lose our rights to use the Engel & Völkers System and Trademarks. |
| f. Termination by franchisor with cause | §§20.2 – 20.4, | We can only terminate if you default, except if we lose our rights to use the Engel & Völkers System and Trademarks. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 63–71)
What This Means (2025 FDD)
According to the 2025 Engel & Volkers Franchise Disclosure Document, the franchisor can terminate the Franchise Agreement with cause if the franchisee or their affiliate defaults under any agreement with Engel & Volkers or its affiliates, and the default is not curable or is not cured during the cure period. This is outlined in Section 20.2 – 20.4 of the Franchise Agreement.
This means that if a franchisee's affiliate becomes insolvent and is unable to meet its financial obligations under an agreement with Engel & Volkers, Engel & Volkers has the right to terminate the Franchise Agreement. The franchisee would lose their franchise and the right to operate under the Engel & Volkers brand.
It is important for prospective franchisees to carefully review all agreements with Engel & Volkers and its affiliates, and to ensure that their affiliates are financially stable and able to meet their obligations. Franchisees should also understand the cure period and the steps they can take to prevent termination of the Franchise Agreement in the event of a default.