Under what circumstances will the Engel & Volkers Franchise Agreement automatically terminate without notice?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
This provision is subject to state law. | | e. Termination by franchisor without cause | §§4.8 | We can terminate upon written notice to you if we lose our rights to use the Engel & Völkers System and Trademarks. | | f. Termination by franchisor with cause | §§20.2 – 20.4, | We can only terminate if you default, except if we lose our rights to use the Engel & Völkers System and Trademarks. | | Provision | Section in | Summary | | | Franchise | | | w. Choice of law | §26.1 §8.3, Appendix 2 | New York law applies. For sales of goods and services by us, New York law applies. For sales of goods and services by E&V Residential or its affiliates based in Germany, German law applies. This provision may be subject to state law. | |---|---|---| | Provision | Section in | Summary | |-----------|------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | | Franchise | | | | Agreement | | | | | agreement with us or our affiliates and the default | | | | under that agreement is not curable or you or your | | | | affiliate did not cure it during the cure period (and we | | | | may also terminate the other agreement if you are in | | | | default under the Franchise Agreement); you omitted | | | | or misrepresented any material fact in the information | | | | you furnished to us in connection with our decision to | | | | enter into a Franchise Agreement with you; you and | | | | we agree to terminate the Franchise Agreement; you | | | | purport to transfer any interest in your franchise to a | | | | third party in violation of the Franchise Agreement; | | | | you use or duplicate any aspects of the Engel & | | | | Völkers System, services, program or products in an | | | | unauthorized fashion; you engage in any business or | | | | market any services under a name or mark that in our | | | | opinion is confusingly similar to the Trademarks; you | | | | abandon or cease to operate your franchised business; | | | | you knowingly conceal revenues, maintain false | | | | books or records, falsify information or otherwise | | | | defraud or make false representations to us; you do | | | | not maintain required financial records, you are | | | | found, after our audit, to have understated your | | | | revenues by 2% or more at least three times within | | | | any 36-months period, or by 5% for a reporting | | | | period; you take, withhold, misdirect or appropriate | | | | funds for your own use from your employees' wages, | | | | us or you systematically fail to deal fair and honestly | | | | with your staff members, clients, sales advisors or | | | | suppliers, or fail to take action against or discharge an | | | | agent, servant or staff member sho embezzled funds; | | | | you commit the same act of default within six month | | | | after having cured a default under Section 20.4; you | | | | attempt to or interfere in our contractual relationships; | | | | you engage in a practice that subjects you or us to | | | | widespread publicity, ridicule and derision; you | | | | breach a provision of the Franchise Agreement | | | | relating to our advertising standards (incl. but not | | | | limited to our corporate identity) which is not cured | | | | within 3 days after our written notice thereof, your | | | | licenses to operate the franchised business or other | | | | governmental authorizations are revoked or | | | | terminated or you engage in any act or conduct, or | | | | fail to engage in any act or conduct, which authorizes | | | | us under the Franchise Agreement to terminate you | | | | immediately upon notice to you.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 63–71)
What This Means (2025 FDD)
According to the 2025 Engel & Volkers Franchise Disclosure Document, the franchise agreement can be terminated by Engel & Volkers with cause under several circumstances. These include defaults under agreements with Engel & Volkers or its affiliates if the default is not curable or is not cured within the specified period. Additionally, the agreement can be terminated if the franchisee omits or misrepresents material facts during the application process.
Further reasons for termination include unauthorized transfer of franchise interests, misuse or duplication of the Engel & Volkers system, engaging in businesses with confusingly similar names or marks, or abandoning the franchised business. Dishonest practices such as concealing revenues, falsifying records, or defrauding Engel & Volkers can also lead to termination. Failure to maintain required financial records or understating revenues by specified percentages over certain periods are also grounds for termination.
Additional causes for termination involve actions that harm Engel & Volkers's reputation or interfere with its relationships. These include engaging in practices that subject Engel & Volkers to widespread negative publicity, breaching advertising standards without curing the breach within three days of notice, and having licenses or governmental authorizations revoked. Any act or conduct that authorizes Engel & Volkers to terminate the agreement immediately upon notice also falls under this category.
It is important for prospective Engel & Volkers franchisees to carefully review Section 20.2 – 20.4 of the Franchise Agreement, as referenced in Item 17, to fully understand the conditions that could lead to termination. Understanding these conditions is crucial for maintaining compliance and avoiding potential termination of the franchise agreement.