What section of the Engel & Volkers agreement specifies the requirements of the proposed assignee?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
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, Section 22.3.1 outlines the requirements for a proposed assignee. This section specifies that the proposed assignee must apply for acceptance as a franchisee and demonstrate to Engel & Volkers' satisfaction that they possess the necessary skills, qualifications, financial condition, background, history, reputation, economic resources, education, managerial and business experience, moral character, credit rating, and ability to fulfill the obligations under the franchise agreement. This applies not only to the assignee but also to each principal owner and guarantor if the assignee is a business entity.
Engel & Volkers requires the franchisee to cover the costs of any investigation conducted to assess the proposed assignee's qualifications. This condition ensures that Engel & Volkers maintains its brand standards and operational integrity by thoroughly vetting potential new franchisees. The detailed requirements help protect the existing network of franchisees by ensuring that new members are well-qualified and capable of upholding the brand's reputation.
In addition to meeting the outlined qualifications, Engel & Volkers also requires that both the franchisee and the assignee execute a General Release in the franchisor's standard form, as stated in Section 22.3.13. Furthermore, Section 22.3.16 states that the franchisee must pay Engel & Volkers a transfer fee of $2,500 to cover legal, accounting, and other expenses associated with the assignment, unless the transfer involves mortgages or other usual financing encumbrances. These stipulations ensure that Engel & Volkers is compensated for the administrative and legal work involved in the transfer process and that all parties release any potential claims related to the transfer.