Is Engel & Volkers obligated to operate the franchised Business after the franchisee's death or disability?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
If at any time following Franchisee's death or disability (if an individual), or the death or disability of Franchisee's last surviving Principal (if Franchisee is a business entity), the Estate fails to have one or more approved business manager supervising the operation of the franchised Business on a full time basis, then until the Estate retains one, Franchisor may assume full control of and operate the franchised Business, but will have no obligation to do so. If Franchisor does so, then during this period, Franchisor will deduct its expenses for travel, lodging, meals and all other expenses and fees from the franchised Business' Gross Revenues and also pay itself a management fee equal to the greater of: (i) two times the salary paid to the individual(s) assigned by Franchisor to operate the franchised Business, or (ii) 10% of the franchised Business' monthly Gross Revenues. This management fee will be in addition to the ongoing Royalties due to Franchisor under this Agreement. Franchisor will then remit any remaining funds to the Estate. The Estate and any Guarantor of this Agreement must pay Franchisor any deficiency in sums due to Franchisor under this Agreement within ten (10) days of Franchisor notifying the Estate and such Guarantor of the deficiency. Franchisor will not be obligated to operate the franchised Business. If Franchisor does so, it will not be responsible for any operational losses of the franchised Business, nor will it be obligated to continue operating the franchised Business.
Source: Item 22 — CONTRACTS (FDD page 88)
What This Means (2025 FDD)
According to Engel & Volelkers's 2025 Franchise Disclosure Document, Engel & Volkers is not obligated to operate the franchised business after the franchisee's death or disability. However, Engel & Volkers has the option to assume control and operate the business if the franchisee's estate does not have an approved business manager supervising the operation on a full-time basis. This is to ensure the continuity of the business.
If Engel & Volkers chooses to operate the business, it will deduct expenses for travel, lodging, meals, and other fees from the business's gross revenues. Engel & Volkers will also pay itself a management fee. This fee is the greater of two times the salary paid to the individuals assigned by Engel & Volkers to operate the business, or 10% of the business's monthly gross revenues. This management fee is in addition to the ongoing royalties due to Engel & Volkers under the agreement. Any remaining funds will be remitted to the estate.
The estate and any guarantor of the agreement must pay Engel & Volkers any deficiency in sums due within ten days of notification. Engel & Volkers is not responsible for any operational losses of the franchised business if it chooses to operate it, nor is it obligated to continue operating the business indefinitely. This arrangement provides a temporary solution to maintain the business's operation while the estate makes long-term arrangements, but it also places the financial risk of operating the business on the estate.