What restrictions regarding competitive businesses must an Engel & Volkers assignee comply with?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisor does not elect to exercise its right of first refusal (as provided in Section 22.5 below), then Franchisor will not unreasonably withhold consent to Franchisee's sale, transfer or assignment of any interest in Franchisee (if Franchisee is a business entity), the
franchise conveyed by this Agreement and Franchisee's right to use the ENGEL & VÖLKERS System, or any interest in any of these, to a third party. Franchisee agrees that it will not be unreasonable for Franchisor to impose, among other requirements, the following conditions to granting consent to Franchisee's proposed sale, assignment or transfer of any of the foregoing:
- 22.3.1 That the proposed assignee (meaning individual or business entity which, after the proposed assignment, will be the franchisee under this Agreement or under any successor/renewal agreement) applies to Franchisor for acceptance as a franchisee and demonstrates to Franchisor's satisfaction that the proposed assignee (and, if it is a business entity, each and every Principal owner and guarantor of the proposed assignee) possesses the skills, qualifications, financial condition, background and history, reputation, economic resources, education, managerial and business experience, moral character, credit rating and ability to assume the duties and obligations under this Agreement or any successor agreement.
Franchisee must pay the costs of any investigation required to be conducted by Franchisor.
Source: Item 22 — CONTRACTS (FDD page 88)
What This Means (2025 FDD)
According to Engel & Volkers' 2025 Franchise Disclosure Document, a proposed assignee must apply and be accepted by Engel & Volkers as a franchisee. The proposed assignee must demonstrate that they possess the skills, qualifications, financial condition, background, history, reputation, economic resources, education, managerial and business experience, moral character, credit rating, and ability to assume the duties and obligations under the Franchise Agreement. Engel & Volkers requires this to ensure that anyone taking over a franchise meets their standards.
Engel & Volkers also requires the franchisee to cover the costs of any investigation required to be conducted by Engel & Volkers to assess the proposed assignee. This protects Engel & Volkers from incurring expenses related to vetting potential new franchisees.
These conditions are typical in franchise agreements, as franchisors want to maintain brand standards and ensure that new franchisees are capable of running the business successfully. By imposing these requirements, Engel & Volkers aims to protect its brand and the interests of its existing franchisees.