Does Engel & Volkers' right of first refusal apply to all assignments of interest in the Agreement?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisee or any of its owners wish to solicit, offer, or discuss the assignment of any equity or economic interest in Franchisee or assets of its business to a third party (whether by stock sale, asset sale, merger, operation of law or otherwise), Franchisee shall use its best efforts and shall employ reasonable security measures, including having any third parties who are to be presented with Confidential Information sign appropriate nondisclosure agreements which are acceptable to Franchisor, to prevent any unauthorized disclosure of or access to the Proprietary Information and shall immediately advise Franchisor of any information it has or receives of any unauthorized disclosure or access. Franchisee shall provide copies of all such non-disclosure agreements to Franchisor upon request.
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, if a franchisee wishes to solicit, offer, or discuss the assignment of any equity or economic interest in the franchise to a third party, they must take precautions to protect proprietary information and inform Engel & Volkers of any unauthorized disclosures.
Engel & Volkers has the right of first refusal regarding the sale, transfer, or assignment of any interest in the franchise. If Engel & Volkers chooses not to exercise this right, they will not unreasonably withhold consent to the franchisee's sale, transfer, or assignment of any interest in the franchise to a third party. However, Engel & Volkers may impose conditions, including requiring the proposed assignee to apply for acceptance as a franchisee and demonstrate that they possess the necessary skills, qualifications, financial condition, and experience to fulfill the obligations of the agreement.
The franchisee is responsible for covering the costs of any investigation conducted by Engel & Volkers to assess the proposed assignee. This process ensures that any potential new franchisee meets the standards and requirements set by Engel & Volkers, maintaining the integrity and quality of the franchise system.