To what is Engel & Volkers' liability restricted, even when liable?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
ation obligations of this Section 17.1 will survive the expiration or sooner termination of this Agreement.
- 17.2 Liability to Other Franchisees: Should Franchisee commit a breach of contract by acting contrary to the foregoing provisions, Franchisee shall be liable for payment of compensation to other ENGEL & VÖLKERS System franchisees who may thereby have suffered loss in individual cases.
- 17.3 Liquidated Damages: In order to preserve the ENGEL & VÖLKERS System in the interest of all franchisees it is necessary to protect the relevant trade secrets and know-how and prevent its disclosure to the competition. The parties recognize the difficulty of ascertaining damages to Franchisor resulting from premature termination of this Agreement and have provided for liquidated damages, which liquidated damages represent the parties' best estimate as to the damages arising from the circumstances in which they are provided and which are the only damages for the premature termination of this Agreement and not as a penalty or as damages for breaching this Agreement or in lieu of any other payment. Accordingly, if this Agreement is terminated for Franchisee's breach before the Term expires, in addition to any other remedies available to Franchisor, Franchisee must pay Franchisor an amount equal to the combined monthly average of Royalty fees, National Marketing and Technology Fund contributions, and any other fees due and payable under this Agreement commencing with the Opening Date through the date of termination, multiplied by the lesser of (i) twenty-four (24) months; or (ii) the number of full calendar months remaining in the Term.
Source: Item 22 — CONTRACTS (FDD page 88)
What This Means (2025 FDD)
According to Engel & Volkers' 2025 Franchise Disclosure Document, the agreement specifies liquidated damages in the event of premature termination due to a franchisee's breach. This means that if the franchise agreement is terminated early because the franchisee violated its terms, Engel & Volkers' recovery is limited to a predetermined amount rather than actual damages. This amount is calculated to cover the loss of ongoing payments.
The liquidated damages are calculated as the combined monthly average of Royalty fees, National Marketing and Technology Fund contributions, and any other fees due and payable under the Agreement, from the Opening Date through the date of termination. This average is then multiplied by the lesser of 24 months or the number of full calendar months remaining in the Term. This calculation provides a clear, predetermined financial consequence for early termination due to franchisee breach, offering both parties a degree of certainty.
However, the FDD clarifies that this liquidated damages provision exclusively addresses the loss of cash flow from ongoing payments resulting from the termination. It explicitly excludes any other damages, such as harm to Engel & Volkers' reputation with the public, Sales Advisors, property managers, and landlords, as well as damages arising from violations of any agreement provision other than those related to ongoing payments. Engel & Volkers retains the right to seek injunctions, equitable relief, or remedies related to the franchised Residential Real Estate Brokerage, as provided in the agreement, for defaults or enforcement of provisions beyond ongoing payments.