What limitations are placed on an Engel & Volkers franchisee's commercial property listings?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
Although this Agreement is granting a franchise for a Residential Real Estate Brokerage, Franchisee may also provide real estate brokerage services for commercial properties under the residential Trademarks, provided: (i) the commercial real estate brokerage services are offered as a service ancillary to the provision of real estate brokerage services for residential properties, (ii) Franchisee does not hold itself out as providing commercial real
estate brokerage services as its principal business or as being a stand-alone provider solely of commercial services, and (iii) Franchisee's aggregate listings on a unit basis of commercial properties does not exceed five percent (5%) of all its listings in any calendar year during the term of Franchisee's agreement ("Permitted Commercial Services"). For purposes of clarity, the definition of Permitted Commercial Services does not provide Franchisee with a right to conduct business under any other Trademarks, other than the residential Trademarks.
Source: Item 22 — CONTRACTS (FDD page 88)
What This Means (2025 FDD)
According to Engel & Volkers' 2025 Franchise Disclosure Document, franchisees are primarily granted the right to operate a residential real estate brokerage. However, they may also provide real estate brokerage services for commercial properties under certain conditions. These commercial services must be ancillary to the residential services, and the franchisee cannot present themselves as primarily a commercial real estate brokerage.
The key limitation is that the franchisee's aggregate listings of commercial properties cannot exceed five percent of all their listings in any calendar year. This "Permitted Commercial Services" allowance is designed to allow franchisees to serve existing clients who may have occasional commercial needs, without shifting the focus away from residential properties. The FDD clarifies that this allowance does not grant the franchisee the right to operate under any trademarks other than the residential trademarks.
Engel & Volkers also retains specific rights regarding commercial real estate activities. The franchisor reserves the right to operate or franchise a commercial real estate brokerage at any location inside the franchisee's protected area. This means that while a franchisee can engage in limited commercial real estate services, Engel & Volkers can still establish a dedicated commercial real estate operation, even within the franchisee's territory. This ensures that Engel & Volkers can fully exploit the commercial real estate market without being restricted by the residential franchise agreements.