What is the name of the document attached as Appendix 4 to the Engel & Volkers Franchise Agreement?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
If you are a corporation or other entity, each of your owners that own 10% or more of you ("Principals") must sign a Principal's Guarantee and Assumption of Obligations attached to the Franchise Agreement (Appendix 4 to Exhibit C) agreeing to discharge all your obligations as Franchisee, including your payment obligations, under the Franchise Agreement. If the Principal is in a community property state or for other reasons we determine, the Principal's spouse may also have to sign the Guarantee form. Your Principals must also agree to retain an ownership interest in your company and to not dispose of their interest without our consent. All Principals must also sign a Principal's Acknowledgment agreeing to accept and be bound by their separate rights and obligations in the Franchise Agreement.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 61–62)
What This Means (2025 FDD)
According to Engel & Volkers' 2025 Franchise Disclosure Document, Appendix 4 to Exhibit C, which is the Franchise Agreement, is titled the Principal's Guarantee and Assumption of Obligations. This document is significant because it outlines the commitment required from individuals who own a substantial portion (10% or more) of a franchisee entity.
Engel & Volkers requires that Principals, defined as owners with 10% or greater stake in the franchisee business, must sign this guarantee. This ensures that these key individuals are personally committed to fulfilling the franchisee's obligations under the Franchise Agreement, including all payment obligations. This requirement mitigates the risk for Engel & Volkers, as it provides an additional layer of security beyond the business entity itself.
Furthermore, Engel & Volkers may also require the Principal's spouse to sign the guarantee, particularly if the Principal resides in a community property state. This stipulation aims to protect the franchisor's interests by ensuring that marital assets are also considered in fulfilling the financial obligations of the franchise. The Principals must also agree to maintain their ownership interest and not transfer it without the consent of Engel & Volkers. This ensures stability and continued commitment from the ownership.