If Engel & Volkers requires a franchisee to modify a trademark, is Engel & Volkers obligated to reimburse the franchisee for expenditures?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
If for any reason now or hereafter one or more of the Trademarks can no longer be used, or if Franchisor in its sole business judgment determines to modify or discontinue any of the Trademarks, or to adopt and use one or more additional or substitute Trademarks, then
Franchisee agrees to promptly comply with any of Franchisor's directions or instructions to modify or discontinue use of any Trademark and/or adopt and use one or more additional substitute Trademarks in accordance with the prior sentence. Franchisor shall not have any obligation to reimburse Franchisee for any expenditures Franchisee makes to comply with such instructions or directions. Nor will Franchisor be liable to Franchisee for any other expenses, losses or damages sustained by Franchisee or its franchised Business as a result of any Trademark addition, modification, substitution or discontinuation. Franchisee waives any claim or any such expenses, losses or damages and covenants not to commence or join in any litigation or other proceeding against Franchisor or any of Franchisor's affiliates for any of these expenses, losses or damages. If any trademarks, service marks, tradenames, logos, or other marks that are currently or in the future may be encompassed in the definition of "Trademarks" are modified or discontinued Franchisee's rights to use such Trademarks, or any other rights to such Trademarks shall cease upon Franchisor's notice to Franchisee of the discontinuance or modification, and such trademarks, service marks, tradenames, logos, or other marks will no longer be encompassed in the definition of "Trademarks" under this Agreement with respect to Franchisee's rights thereto.
Source: Item 22 — CONTRACTS (FDD page 88)
What This Means (2025 FDD)
According to Engel & Volkers' 2025 Franchise Disclosure Document, if Engel & Volkers determines to modify or discontinue any of the Trademarks, they are not obligated to reimburse the franchisee for any expenditures the franchisee makes to comply with such directions or instructions. Engel & Volkers also will not be liable to the franchisee for any other expenses, losses, or damages sustained by the franchisee or its franchised business as a result of any Trademark addition, modification, substitution, or discontinuation. The franchisee waives any claim for any such expenses, losses, or damages and covenants not to commence or join in any litigation against Engel & Volkers for any of these expenses, losses, or damages.
This means that as an Engel & Volkers franchisee, you bear the financial risk if the franchisor decides to change its trademarks. This could involve costs for new signage, marketing materials, and other branded items. The franchisee has no recourse to recover these costs from Engel & Volkers.
This type of clause is not uncommon in franchise agreements, as franchisors typically want to maintain control over their brand and trademarks. However, it's crucial for prospective franchisees to understand this potential financial burden and factor it into their investment decisions. Franchisees should carefully consider the potential costs associated with rebranding or trademark changes and assess their ability to absorb these expenses should they arise.