Can Engel & Volkers rescind negotiated terms if a franchisee is in material breach of the agreement?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
- 20.5 Optional Remedy**:** If Franchisee fails to timely pay any amounts due to Franchisor or one of its affiliates, or if Franchisee is in material breach of any obligation under this Agreement, Franchisor may, in addition to or in lieu of its remedy under Section 20.4 or otherwise provided in this Agreement: (i) withhold Franchisee's access to the Integrated Product Suite described in Section 7 and any other services or goods, such as the GG Magazine, that Franchisor or its affiliates are obligated to provide hereunder until such time as Franchisee's payments are current; and/or (ii) rescind any terms to this Agreement that were negotiated between the parties, including reducing Franchisee's Protected Area.
Examples of material breaches of Franchisee's obligations under this Agreement include failure to timely pay any amounts due when payable and failure to timely submit reports required hereunder.
Source: Item 22 — CONTRACTS (FDD page 88)
What This Means (2025 FDD)
According to Engel & Volkers's 2025 Franchise Disclosure Document, Engel & Volkers has the option to rescind negotiated terms within the franchise agreement if a franchisee is in material breach. Specifically, Engel & Volkers may rescind any terms to the agreement that were negotiated between the parties, including reducing the franchisee's protected area. This is in addition to, or in place of, other remedies available to Engel & Volkers.
Examples of material breaches include failing to pay amounts due to Engel & Volkers or failing to submit required reports in a timely manner. This provision gives Engel & Volkers significant leverage in enforcing the franchise agreement, as the potential loss of negotiated terms, such as a protected area, could significantly impact the franchisee's business.
This ability to rescind negotiated terms is not a standard clause in all franchise agreements. Prospective franchisees should carefully consider the potential impact of this clause and negotiate for clear definitions of what constitutes a material breach. They should also understand the potential consequences of such a breach on their specific franchise location and business plan.