Does Engel & Volkers have the right to perform audits of a franchisee's office?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
13.2 Inspections and Certifications: Franchisor and Franchisee agree that it is essential to preserve the standards and uniformity of the ENGEL & VÖLKERS System. Consequently, Franchisee hereby grants Franchisor or its appointed agents the right to perform audits of its office organization, accounting procedures, and other aspects of the Residential Real Estate Brokerage at reasonable times during normal business hours, with or without prior notice to Franchisee, and at the same time to allow inspection of its business documents for the purpose of verifying compliance with the standards and quality required under this Agreement and adherence to those elements of the ENGEL & VÖLKERS System that relate to Franchisee providing residential real estate services under this Agreement. Franchisor shall be entitled to appoint third parties, in particular accountants, to exercise these inspection rights. Franchisor has the right to have Franchisee's books and records
Source: Item 22 — CONTRACTS (FDD page 88)
What This Means (2025 FDD)
According to Engel & Volkers' 2025 Franchise Disclosure Document, Engel & Volkers retains the right to audit a franchisee's office. Engel & Volkers or its appointed agents can perform audits of the franchisee's office organization, accounting procedures, and other aspects of the Residential Real Estate Brokerage. These audits can occur at reasonable times during normal business hours, with or without prior notice to the franchisee. Engel & Volkers can also inspect the franchisee's business documents to verify compliance with the standards and quality required under the Franchise Agreement. Engel & Volkers can appoint third parties, including accountants, to conduct these inspections.
This provision allows Engel & Volkers to ensure that franchisees are adhering to the standards and quality expected within the Engel & Volkers system. By maintaining the right to audit, Engel & Volkers can verify that franchisees are following proper accounting procedures, maintaining organized records, and complying with the operational standards outlined in the franchise agreement and system documentation. This helps protect the brand's reputation and ensures consistency across all franchise locations.
For a prospective Engel & Volkers franchisee, this means they must maintain meticulous and organized business records, including accounting, tax, sales, and financial records, in accordance with industry best practices. They should also be prepared for periodic audits by Engel & Volkers or its representatives, which may occur with or without prior notice. Failure to comply with these audits or to maintain adequate records could result in consequences as outlined in the franchise agreement, potentially including termination of the agreement as noted in section 20.3.22.