Does Engel & Volkers have to provide notice before terminating the Franchise Agreement if the franchisee is adjudicated bankrupt?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
This provision is subject to state law. | | e. Termination by franchisor without cause | §§4.8 | We can terminate upon written notice to you if we lose our rights to use the Engel & Völkers System and Trademarks. | | f. Termination by franchisor with cause | §§20.2 – 20.4, | We can only terminate if you default, except if we lose our rights to use the Engel & Völkers System and Trademarks. | | Provision | Section in | Summary | | | Franchise | | | w. Choice of law | §26.1 §8.3, Appendix 2 | New York law applies. For sales of goods and services by us, New York law applies. For sales of goods and services by E&V Residential or its affiliates based in Germany, German law applies. This provision may be subject to state law. | |---|---|---| | 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)
The 2025 Engel & Volkers Franchise Disclosure Document does not explicitly state whether Engel & Volkers must provide notice before terminating the Franchise Agreement if the franchisee is adjudicated bankrupt. Item 17 outlines various scenarios under which Engel & Volkers can terminate the agreement with cause, but it does not specifically address bankruptcy.
However, Item 17 (f) mentions that Engel & Volkers can terminate the agreement if the franchisee defaults. It is possible that being adjudicated bankrupt could be considered a default under the agreement, but the FDD does not clarify this point. The document also states that Engel & Volkers can terminate the agreement if the franchisee fails to maintain required financial records.
Prospective franchisees should seek clarification from Engel & Volkers regarding the specific conditions under which the agreement can be terminated due to financial issues such as bankruptcy. Understanding the circumstances that constitute a default and the required notice periods is crucial for assessing the risks associated with investing in an Engel & Volkers franchise.