Under what circumstances can an Engel & Volkers franchisee refuse to cooperate with service companies designated by the franchisor?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
- 12.1.2 Franchisor will inform Franchisee of any exclusive cooperation arrangements entered into by Franchisor with services companies, e.g., providing for financial services, such as banks, insurance companies or other vendors offering services tailored for use by real estate professionals.
In such cases, Franchisee shall then cooperate exclusively with these services companies in accordance with the terms and conditions of the cooperation agreement between Franchisor and those companies, except in cases where Franchisee has legitimate commercial or financial reasons for refusing such cooperation.
Franchisee acknowledges that provisions of these kinds of services may require Franchisee to obtain additional licenses to comply with the laws regulating those industries.
Franchisor will have the right to retain any commissions or event sponsorships earned due to any such cooperation required by Franchisee.
Franchisee may propose service companies or sponsoring vendors to Franchisor for use by Franchisee, subject, however, to Franchisor's prior written approval.
If Franchisee makes such a proposal, it shall be in writing with sufficient information for Franchisor to make a determination whether such service company or sponsoring vendor and its services are acceptable.
Such determination shall be in Franchisor's business judgment.
Source: Item 22 — CONTRACTS (FDD page 88)
What This Means (2025 FDD)
According to Engel & Volkers' 2025 Franchise Disclosure Document, franchisees are generally expected to cooperate exclusively with service companies that Engel & Volkers has established exclusive cooperation arrangements with. These service companies may provide financial services such as banking, insurance, or other services tailored for real estate professionals.
However, an Engel & Volkers franchisee can refuse to cooperate with these designated service companies if they have legitimate commercial or financial reasons for doing so. The FDD does not elaborate on what constitutes a "legitimate commercial or financial reason," leaving room for interpretation based on the specific circumstances.
It's important to note that Engel & Volkers retains the right to any commissions or event sponsorships earned due to the cooperation required of the franchisee with these designated service companies. While franchisees can propose alternative service companies or sponsoring vendors, Engel & Volkers has the final say on whether to approve them, based on their business judgment.