Under what circumstances can Engel & Volkers reduce a franchisee's Protected Area?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
Should Franchisor grant Franchisee a franchise for multiple physical locations the size of the Protected Area will reflect the parties' intent that Franchisee operate multiple physical locations.
If Franchisee should not find or operate such additional locations as agreed upon, Franchisor may reduce Franchisee's Protected Area to reflect the lower than intended number of physical locations that are operational and Franchisor also may reduce the Protected Area pursuant to Section 20.5 (Optional Remedy). "Exclusivity" means only that no other Engel & Völkers Residential Real Estate Brokerage will be placed in Franchisee's Protected Area by Franchisor so long as Franchisee is not in default under the terms of this Agreement. "Exclusivity" does not mean that Franchisor, its affiliates, or other franchisees are prevented from soliciting clients, marketing their residential real estate brokerage services, or concluding real estate transactions in the Protected Area.
Source: Item 22 — CONTRACTS (FDD page 88)
What This Means (2025 FDD)
According to Engel & Volkers' 2025 Franchise Disclosure Document, the franchisor may reduce a franchisee's protected area under specific circumstances related to the operation of multiple locations. If Engel & Volkers grants a franchisee rights to a protected area intending that the franchisee operate multiple physical locations, the size of the protected area will reflect this intent.
However, if the franchisee fails to open and operate the agreed-upon number of additional locations, Engel & Volkers reserves the right to reduce the franchisee's protected area. This reduction would align the protected area with the actual number of operational locations. Additionally, Engel & Volkers may reduce the protected area under Section 20.5, which refers to an optional remedy, although the specific details of Section 20.5 are not provided in this excerpt.
It is important to note that the exclusivity granted to Engel & Volkers franchisees within their protected area means that the franchisor will not place another Engel & Volkers Residential Real Estate Brokerage within that area, as long as the franchisee is not in default of the agreement. However, this exclusivity does not prevent Engel & Volkers, its affiliates, or other franchisees from soliciting clients, marketing their services, or concluding real estate transactions within the protected area. This distinction is crucial for prospective franchisees to understand the scope and limitations of their protected area.