Under what condition will the Engel & Volkers franchise agreement automatically terminate?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
- 20.2 Automatic Termination Without Notice.
Franchisee will be in default under this Agreement, and all rights granted in this Agreement will immediately and automatically terminate and revert to Franchisor without notice to Franchisee, if: Franchisee, the franchised Business or any affiliate or Guarantor thereof is adjudicated as bankrupt or insolvent; all or a substantial portion of the assets of the franchised Business are assigned to or for the benefit of any creditor; a petition in bankruptcy is filed by or against Franchisee, the franchised Business and/or any affiliate or Guarantor thereof and is not immediately contested and thereafter dismissed or vacated within sixty (60) days from filing; Franchisee, the franchised Business and any affiliate or Guarantor thereof cause, permit or acquiesce in an order for relief under the U.S.
Source: Item 22 — CONTRACTS (FDD page 88)
What This Means (2025 FDD)
According to Engel & Volkers' 2025 Franchise Disclosure Document, the franchise agreement can automatically terminate without notice if certain financial or legal conditions are met. Specifically, the agreement will terminate if the franchisee, the franchised business, or any guarantor is adjudicated bankrupt or insolvent. Similarly, automatic termination occurs if a substantial portion of the business's assets are assigned to benefit creditors.
Another condition leading to automatic termination is the filing of a bankruptcy petition by or against the franchisee, the franchised business, or any affiliate or guarantor, which is not immediately contested and dismissed within 60 days. These terms are designed to protect Engel & Volkers from financial instability or legal jeopardy on the part of its franchisees.
These automatic termination clauses are relatively standard in franchising, as franchisors need to protect their brand and system from the negative impacts of franchisee insolvency. Prospective Engel & Volkers franchisees should understand these conditions and ensure they have sufficient financial stability and legal compliance to avoid triggering automatic termination of their franchise agreement.