Under what circumstances is an Engel & Volkers franchisee liable for compensation to other franchisees?

According to Engel & Volkers' 2025 Franchise Disclosure Document, an Engel & Volkers franchisee may be liable for payment of compensation to other franchisees within the Engel & Volkers system. This liability arises if the franchisee breaches the franchise agreement by acting contrary to its provisions, and this breach results in a loss for other franchisees. This clause ensures that all franchisees adhere to the standards and practices of the Engel & Volkers system, protecting the brand's integrity and the interests of all franchisees.

This provision is fairly standard in franchise agreements, as it aims to maintain a consistent level of quality and service across all franchise locations. By holding franchisees accountable for breaches that harm other franchisees, Engel & Volkers encourages compliance and protects the overall network. This can include actions such as violating territorial restrictions, misusing proprietary information, or failing to meet brand standards, all of which could negatively impact other franchisees' businesses.

For a prospective Engel & Volkers franchisee, this means understanding and adhering to all terms of the franchise agreement is crucial. Failure to do so could not only result in direct penalties from Engel & Volkers but also potential financial liabilities to fellow franchisees who suffer losses as a result of the breach. It is important to carefully review the franchise agreement and seek legal counsel to fully understand these obligations and potential risks.