Under what conditions must an Engel & Volkers franchisee reimburse inspection and audit costs?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Inspection and Audit Costs | You must reimburse us for the cost of inspection or audit, including the charges of our employees, attorneys and accountants, and travel expenses. | On demand | Payable if the inspection or audit shows an underpayment of royalty payments greater than 2%. |
Source: Item 6 — OTHER FEES (FDD pages 22–30)
What This Means (2025 FDD)
According to Engel & Volkers's 2025 Franchise Disclosure Document, franchisees must reimburse Engel & Volkers for inspection and audit costs under specific circumstances. These costs include charges from Engel & Volkers' employees, attorneys, and accountants, as well as travel expenses related to the inspection or audit.
The key condition that triggers this reimbursement obligation is a finding of underpayment of royalty payments exceeding 2%. If an inspection or audit reveals that the franchisee has underpaid royalties by more than this threshold, the franchisee becomes responsible for covering the costs associated with the inspection or audit.
This provision serves as an incentive for Engel & Volkers franchisees to accurately report and pay their royalty fees. It also protects Engel & Volkers by allowing them to recoup expenses incurred when investigating potential underreporting. The reimbursement is due upon demand.