What rights of offsetting and retention does the Purchaser have against Engel & Volkers?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
- 14.9 Claims Set-off: Franchisee shall not be entitled to set off counterclaims against payments due to Franchisor nor to withhold any payment or claim rights of retention. Franchisee may not withhold, set-off or recoup payment of any amount due on the grounds of the alleged non-performance or breach of any of Franchisor's or its affiliates' obligations under this Agreement or any other agreement.
Source: Item 22 — CONTRACTS (FDD page 88)
What This Means (2025 FDD)
According to Engel & Volkers' 2025 Franchise Disclosure Document, franchisees are explicitly restricted from offsetting counterclaims against payments owed to Engel & Volkers. This means a franchisee cannot deduct any amounts they believe Engel & Volkers owes them from their royalty or other payments. Additionally, franchisees are prohibited from withholding payments or claiming rights of retention based on alleged non-performance or breach of contract by Engel & Volkers or its affiliates. This applies to the franchise agreement itself or any other agreement between the franchisee and Engel & Volkers.
This clause is designed to ensure that Engel & Volkers receives timely and consistent payments from its franchisees, regardless of any disputes that may arise. It places the onus on the franchisee to resolve disputes through other legal channels while still meeting their financial obligations to the franchisor. This type of clause is relatively common in franchise agreements, as it protects the franchisor's revenue stream and avoids payment disruptions due to disagreements.
For a prospective Engel & Volkers franchisee, this means that they must be prepared to make all required payments on time, even if they believe Engel & Volkers has breached the franchise agreement. Failure to do so could result in penalties, including termination of the franchise agreement. It is crucial for franchisees to understand this provision and factor it into their financial planning and dispute resolution strategy. If a franchisee has a dispute with Engel & Volkers, they will need to pursue resolution through separate legal action without withholding payments.