What is the royalty rate for an Engel & Volkers franchise with annual gross revenues between $5,000,000.01 and $10,000,000?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee will pay the following ongoing royalties to Franchisor throughout the Term in return for use of the ENGEL & VÖLKERS System and the rights acquired under this Agreement:
- 14.2.1 For each full or partial calendar year during the Term, subject to the Minimum Annual Royalty (as defined below) and subject to the provisions set forth in Section 14.2, Franchisee will pay Franchisor an ongoing royalty on its Gross Revenues (as defined in Section 14.2.2) at the percentage rate set forth in the schedule below (the "Royalty Schedule"). Within each tier of the Royalty Schedule, the amount of Gross Revenues achieved by Franchisee is multiplied by the royalty rate of that tier to calculate the Royalty rate for that Gross Revenue reported by Franchisee.
The Royalty rate reflected for each tier in the Royalty Schedule applies only to the increment of Franchisee's Gross Revenue listed for such tier. Achieving sufficient Gross Revenue for some Gross Revenue to qualify into a higher tier in the Royalty Schedule will not reduce Royalties owed and payable by Franchisee to Franchisor on Gross Revenue in a lower Gross Revenue tier.
Source: Item 22 — CONTRACTS (FDD page 88)
What This Means (2025 FDD)
Based on Engel & Volkers' 2025 Franchise Disclosure Document, the royalty rate is structured in tiers based on gross revenue. The document does not provide the specific royalty rate for an Engel & Volkers franchise with annual gross revenues between $5,000,000.01 and $10,000,000.
The FDD does state that the royalty rate reflected for each tier in the Royalty Schedule applies only to the increment of Franchisee's Gross Revenue listed for such tier. The amount of Gross Revenues achieved by Franchisee is multiplied by the royalty rate of that tier to calculate the Royalty rate for that Gross Revenue reported by Franchisee. Achieving sufficient Gross Revenue for some Gross Revenue to qualify into a higher tier in the Royalty Schedule will not reduce Royalties owed and payable by Franchisee to Franchisor on Gross Revenue in a lower Gross Revenue tier.
To fully understand the royalty obligations for an Engel & Volkers franchise, a prospective franchisee should ask the franchisor for a complete Royalty Schedule. This schedule will detail the specific percentage charged for each tier of gross revenue, allowing for an accurate calculation of total royalty fees based on projected earnings. Understanding the complete schedule is crucial for financial planning and assessing the profitability of the franchise.