Are there any non-competition covenants that apply after the Engel & Volkers franchise is terminated or expires?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
Summary column (r) in Item 17 of the Franchise Disclosure Document and Section 16.2 of the Franchise Agreement prohibit you from providing real estate agency services competing with the Engel & Völkers System within the License Territory or adjacent territories that offers services competitive with those offered, franchised by us for 1 year after termination or expiration of the Franchise Agreement.
Covenants not to compete such as those mentioned above are generally considered unenforceable in the State of North Dakota.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 63–71)
What This Means (2025 FDD)
According to Engel & Volkers' 2025 Franchise Disclosure Document, there are indeed post-term non-compete covenants. Specifically, Item 17 outlines that franchisees are prohibited from providing real estate agency services that compete with the Engel & Völkers System within the License Territory or adjacent territories offering competitive services for one year after the termination or expiration of the Franchise Agreement. This restriction aims to protect Engel & Volkers' market position and brand integrity.
However, the FDD also notes an important caveat for franchisees in North Dakota. The document states that covenants not to compete, including the one described above, are generally considered unenforceable in North Dakota. This is due to North Dakota Century Code Section 9-08-06 and North Dakota Franchise Investment Law Section 51-19-09, which the Commissioner has determined to be contrary to such restrictions.
Therefore, while Engel & Volkers includes a standard non-compete clause in its Franchise Agreement, its enforceability depends significantly on the franchisee's location. Prospective franchisees should be aware of these restrictions and consult with legal counsel to understand the specific implications in their state.