Upon termination of the Engel & Volkers agreement, what immediate payments are required from the franchisee?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
parties to this Agreement limits Franchisor's rights of termination under this Agreement or requires longer notice or cure periods than those set forth above, then this Agreement will be considered modified to conform to the minimum notice, cure periods or restrictions upon termination required by the laws and regulations. Franchisor will not, however, be precluded from contesting the validity, enforceability or application of the laws or regulations in any action, proceeding, hearing or dispute relating to this Agreement or the termination of this Agreement.
21. Consequences of Expiration or Termination of Agreement
21.1 Cessation of Business Operation: On expiration or termination of this Agreement for any reason, Franchisee will do the following in regard to the franchised Business:
- 21.1.1 immediately pay any amounts due and outstanding under this Agreement, plus any interest owed. If such sums are not paid within ten (10) days of the effective date of expiration or termination, interest will accrue, calculated as provided herein. Notwithstanding the foregoing sentence, Royalty payments on Gross Revenue
from property listings with the Residential Real Estate Brokerage during the Term, that is received, directly or indirectly, by Franchisee or its owners within six (6) months of the date of termination will be due within thirty (30) days of receipt;
21.1.2 immediately cease using the ENGEL & VÖLKERS System, including the Trademarks, and Confidential Information;
Source: Item 22 — CONTRACTS (FDD page 88)
What This Means (2025 FDD)
According to Engel & Volkers' 2025 Franchise Disclosure Document, upon termination of the Franchise Agreement, the franchisee must immediately pay several amounts. First, the franchisee must pay all outstanding amounts due under the Agreement, including any interest owed. If these sums are not paid within ten days of termination, interest will continue to accrue. Royalty payments on gross revenue from property listings during the term, received by the franchisee within six months of termination, are due within thirty days of receipt.
Additionally, if the termination results from the franchisee's default or failure to make payment after receiving notice to cure, the franchisee must pay Engel & Volkers for all losses and expenses incurred due to the default or termination. This includes all damages, costs, expenses, and reasonable legal and expert fees directly related to the termination.
Furthermore, if the Agreement is terminated due to the franchisee's breach before the term expires, the franchisee must pay Engel & Volkers an amount equal to the combined monthly average of Royalty fees, National Marketing and Technology Fund contributions, and any other fees due from the Opening Date through the termination date, multiplied by the lesser of 24 months or the number of full calendar months remaining in the Term. This payment acts as liquidated damages to compensate Engel & Volkers for the premature termination of the agreement.