Under what conditions will an Engel & Volkers franchisee be charged interest on overdue payments?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
- 14.8 Interest: Franchisor will normally obtain payment at the time of settlement or closing (or as otherwise may be permitted herein), and for all other amounts due under this Agreement by direct debit from Franchisee's account.
In cases where payment at the time of settlement or closing or direct debit is not feasible and Franchisee falls more than ten (10) days into arrears with any payments due under the terms of this Agreement, Franchisee shall pay interest on the outstanding overdue balance at the maximum commercial contract interest rate permitted by law.
If there is no applicable legal maximum rate, interest will be
calculated at the rate of 4% above the prime rate of interest identified by Citibank, N.A. in New York City (or any successor to it) on the first day of each month that an amount is past due. This provision does not constitute consent to late payments or an agreement to extend credit. If Franchisee is delinquent in any required payment, Franchisor or its affiliates may apply any payment from Franchisee to any obligation due in whatever order and for whatever purposes as Franchisor determines, whether or not there is any contrary designation by Franchisee. In the event that Franchisee is eligible to receive any payments from Franchisor pursuant to an incentive program, Franchisor may apply such incentive payments to offset any of Franchisee's past due indebtedness to Franchisor. Franchisor may also set-off any amounts Franchisee or its owners owe Franchisor or its affiliates against any amounts Franchisor or its affiliates owe to Franchisee or its owners. Franchisor may also charge Franchisee interest at the above rate on any Royalty or National Marketing and Technology Fund balances for Gross Revenues that were not reported by Franchisee to Franchisor, or not reported at the time when due pursuant to Section 13.1.
Source: Item 22 — CONTRACTS (FDD page 88)
What This Means (2025 FDD)
According to Engel & Volkers's 2025 Franchise Disclosure Document, interest charges apply to overdue payments under specific circumstances. Engel & Volkers typically collects payments at the time of settlement or closing, or via direct debit. However, if these methods are not feasible, and a franchisee's payment is more than ten days late, interest will be charged on the outstanding balance.
The interest rate is determined by the maximum commercial contract interest rate permitted by law. If there is no legally defined maximum rate, the interest will be calculated at 4% above the prime interest rate identified by Citibank, N.A. in New York City (or its successor) on the first day of each month the amount is overdue. This interest charge also applies to any Royalty or National Marketing and Technology Fund balances for Gross Revenues that were either not reported or not reported on time.
It's important to note that this interest charge does not imply consent to late payments or an agreement to extend credit. Engel & Volkers retains the right to apply any payment from the franchisee to any outstanding obligation, regardless of any designation made by the franchisee. Furthermore, Engel & Volkers can offset any amounts owed to the franchisee against any past due indebtedness. Franchisees should be aware of these conditions to avoid incurring interest charges and maintain good financial standing with Engel & Volkers.