What are the potential consequences for an Engel & Volkers franchisee if they breach the Franchise Agreement?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in | Summary |
|---|---|---|
| Franchise | ||
| Agreement | ||
| agreement with us or our affiliates and the default | ||
| under that agreement is not curable or you or your | ||
| affiliate did not cure it during the cure period (and we | ||
| may also terminate the other agreement if you are in | ||
| default under the Franchise Agreement); you omitted | ||
| or misrepresented any material fact in the information | ||
| you furnished to us in connection with our decision to | ||
| enter into a Franchise Agreement with you; you and | ||
| we agree to terminate the Franchise Agreement; you | ||
| purport to transfer any interest in your franchise to a | ||
| third party in violation of the Franchise Agreement; | ||
| you use or duplicate any aspects of the Engel & | ||
| Völkers System, services, program or products in an | ||
| unauthorized fashion; you engage in any business or | ||
| market any services under a name or mark that in our | ||
| opinion is confusingly similar to the Trademarks; you | ||
| abandon or cease to operate your franchised business; | ||
| you knowingly conceal revenues, maintain false | ||
| books or records, falsify information or otherwise | ||
| defraud or make false representations to us; you do | ||
| not maintain required financial records, you are | ||
| found, after our audit, to have understated your | ||
| revenues by 2% or more at least three times within | ||
| any 36-months period, or by 5% for a reporting | ||
| period; you take, withhold, misdirect or appropriate | ||
| funds for your own use from your employees' wages, | ||
| us or you systematically fail to deal fair and honestly | ||
| with your staff members, clients, sales advisors or | ||
| suppliers, or fail to take action against or discharge an | ||
| agent, servant or staff member sho embezzled funds; | ||
| you commit the same act of default within six month | ||
| after having cured a default under Section 20.4; you | ||
| attempt to or interfere in our contractual relationships; | ||
| you engage in a practice that subjects you or us to | ||
| widespread publicity, ridicule and derision; you | ||
| breach a provision of the Franchise Agreement | ||
| relating to our advertising standards (incl. but not | ||
| limited to our corporate identity) which is not cured | ||
| within 3 days after our written notice thereof, your | ||
| licenses to operate the franchised business or other | ||
| governmental authorizations are revoked or | ||
| terminated or you engage in any act or conduct, or | ||
| fail to engage in any act or conduct, which authorizes | ||
| us under the Franchise Agreement to terminate you | ||
| immediately upon notice to you. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 63–71)
What This Means (2025 FDD)
According to Engel & Volkers's 2025 Franchise Disclosure Document, if a franchisee breaches the Franchise Agreement, Engel & Volkers has grounds for termination. Engel & Volkers can terminate the agreement if the franchisee defaults on the agreement with them or their affiliates, especially if the default is not curable or remains uncured during the specified cure period. This also applies if the franchisee defaults on another agreement with Engel & Volkers, allowing Engel & Volkers to terminate both agreements.
Further reasons for termination include omitting or misrepresenting material facts during the application process, unauthorized use or duplication of the Engel & Volkers system, services, programs, or products, or engaging in business under a confusingly similar name or mark. Abandoning the franchised business, concealing revenues, falsifying records, or making false representations to Engel & Volkers are also grounds for termination. Failing to maintain required financial records or understating revenues by specified percentages (2% or more at least three times within any 36-month period, or by 5% for a reporting period) can lead to termination.
Additional causes for termination involve mishandling funds, such as taking funds from employee wages or failing to address embezzlement by staff. Committing the same act of default within six months of curing a previous default, interfering in Engel & Volkers' contractual relationships, or engaging in practices that subject Engel & Volkers to widespread negative publicity can also result in termination. Breaching advertising standards related to corporate identity and failing to cure the breach within three days of written notice, or having licenses or governmental authorizations revoked, are further grounds for termination.
In North Dakota, certain provisions of the Franchise Agreement are superseded by North Dakota law. Specifically, any requirement for the franchisee to sign a general release upon renewal is deleted, as it is considered unfair under North Dakota Franchise Investment Law. Additionally, covenants not to compete are generally considered unenforceable in North Dakota.