What is the scope of the agreement regarding residential real estate brokerages for an Engel & Volkers franchise?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
- 2.1 Grant of Franchise: Subject to the terms of this Agreement, Franchisor hereby grants to Franchisee the non-exclusive right to establish and operate an ENGEL & VÖLKERS® residential real estate brokerage at the Approved Location for the provision of real estate brokerage services with respect to residential properties of the type permitted under Section 2.2 using the ENGEL & VÖLKERS System and Trademarks (the "Residential Real Estate Brokerage").
- 2.2 Types of Property: Franchisee may provide real estate brokerage services only for residential properties consisting of a house or building (including an apartment within a multi-family building) or undeveloped land, including leaseholds, vacation and resort residential units, cooperatives, condominiums, and any other form of real estate for which a residential real estate brokerage license is required under applicable law.
Although this Agreement is granting a franchise for a Residential Real Estate Brokerage, Franchisee may also provide real estate brokerage services for commercial properties under the residential Trademarks, provided: (i) the commercial real estate brokerage services are offered as a service ancillary to the provision of real estate brokerage services for residential properties, (ii) Franchisee does not hold itself out as providing commercial real
estate brokerage services as its principal business or as being a stand-alone provider solely of commercial services, and (iii) Franchisee's aggregate listings on a unit basis of commercial properties does not exceed five percent (5%) of all its listings in any calendar year during the term of Franchisee's agreement ("Permitted Commercial Services"). For purposes of clarity, the definition of Permitted Commercial Services does not provide Franchisee with a right to conduct business under any other Trademarks, other than the residential Trademarks.
2.3 Protected Area: Subject to the restrictions set forth in this Agreement, during the Term of this Agreement, if Franchisee is not in default under this Agreement, Franchisee will have exclusivity with regard to its Residential Real Estate Brokerage in an area defined by U.S. postal zip codes (hereinafter called the "Protected Area").
Source: Item 22 — CONTRACTS (FDD page 88)
What This Means (2025 FDD)
According to Engel & Volkers's 2025 Franchise Disclosure Document, the franchise agreement grants the franchisee the non-exclusive right to establish and operate a residential real estate brokerage at an approved location. This brokerage will provide real estate services for residential properties, utilizing the Engel & Volkers system and trademarks. The types of properties covered include houses, buildings (including apartments), undeveloped land, leaseholds, vacation and resort residential units, cooperatives, condominiums, and any other form of real estate requiring a residential real estate brokerage license under applicable law.
While the franchise is primarily for residential real estate, Engel & Volkers franchisees may also offer commercial real estate brokerage services under the residential trademarks. However, these commercial services must be ancillary to the residential services. Franchisees cannot present themselves as primarily offering commercial services or as a standalone provider of only commercial services. Furthermore, the aggregate listings of commercial properties cannot exceed 5% of all listings in any calendar year. This allowance for commercial services is termed "Permitted Commercial Services" and does not grant the franchisee the right to operate under any trademarks other than the residential ones.
The Engel & Volkers franchise agreement also includes a protected area defined by U.S. postal zip codes, within which the franchisee has exclusivity for their residential real estate brokerage, provided they are not in default of the agreement. This protected area offers a degree of market exclusivity, but it is subject to the terms and restrictions outlined in the franchise agreement. Franchisees must operate their brokerage in accordance with the Engel & Volkers system and documentation, maintaining professional standards and protecting the brand's reputation.