Under what conditions might Engel & Volkers require a purchaser to provide security for shipments?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
We reserve the right to require payment for any shipment hereunder in advance, or satisfactory security, if the financial performance or credit worthiness of Purchaser is unsatisfactory to us. Such security includes, but is not limited to, execution by Purchaser of a promissory note, security agreement, financing statement and/or personal guarantee. If Purchaser fails to make payment in accordance with the terms of this agreement or otherwise fails to comply with any provision hereof, we may, at our option (and in addition to other remedies), cancel any unshipped portion of this order; in such event, Purchaser will remain liable for all unpaid accounts.
Source: Item 22 — CONTRACTS (FDD page 88)
What This Means (2025 FDD)
According to Engel & Volkers' 2025 Franchise Disclosure Document, Engel & Volkers reserves the right to demand advance payment or security for shipments if the purchaser's financial performance or creditworthiness is deemed unsatisfactory. This means that if a franchisee's financial situation appears unstable or risky to Engel & Volkers, they may require the franchisee to provide assurance of payment before shipping any goods or materials.
The security required by Engel & Volkers can take various forms, including a promissory note, a security agreement, a financing statement, or a personal guarantee from the purchaser. This provides Engel & Volkers with a legal recourse to recover funds if the franchisee fails to pay for the shipments.
Engel & Volkers also retains the option to cancel any unshipped portion of an order if the purchaser fails to make payments or comply with any other terms of the agreement. In such a case, the purchaser remains liable for all unpaid accounts, meaning they are still responsible for paying for any goods or services already received, even if the remaining order is canceled. This clause protects Engel & Volkers from potential losses due to a franchisee's financial instability or non-compliance.