What is the consequence for Epcon Communities franchisees who violate the terms of the Franchise Agreement relating to transfer of the franchise or ownership interest?
Epcon_Communities Franchise · 2025 FDDAnswer from 2025 FDD Document
calendar year, but do not currently do so.
If you violate the terms of your Franchise Agreement relating to transfer of your franchise or ownership interest in your business entity, you will not be eligible for the volume-based reduction to Point of Closing Royalty Payments, the cap on the calculation of Point of Closing Royalty Payments or the limit on the total Point of Closing Royalty Payments to be made by you in a particular year.
Note 3: Marketing Program Fee: You must pay us, Epcon Marketing or another entity designated by us, a marketing program fee ("Marketing Program Fee") in the amount of $625 per month for each of your projects. However, if you have more than one project under construction and you are actively marketing Units for sale in all of those projects, we currently discount the amount of the Marketing Program Fee that you are required to pay.
Source: Item 6 — OTHER FEES (FDD pages 16–22)
What This Means (2025 FDD)
According to Epcon Communities' 2025 Franchise Disclosure Document, franchisees who violate the terms of their Franchise Agreement regarding the transfer of the franchise or ownership interest in their business entity face specific financial consequences related to royalty payments.
Specifically, these franchisees will lose eligibility for certain benefits related to Point of Closing Royalty Payments. They will not be eligible for the volume-based reduction to these payments, meaning they will not receive a reduced percentage rate based on the number of units sold. They also forfeit the cap on the calculation of Point of Closing Royalty Payments, potentially increasing their royalty obligations if unit sales prices exceed a certain threshold set by Epcon Communities. Finally, they will not be eligible for any refund of Minimum Monthly Royalty payments, which are $2,000 per month if no unit sales occur.
Furthermore, Epcon Communities retains the right to increase the percentage used to calculate the franchisee's Point of Closing Royalty Payments to 3.5%. These measures collectively serve as a deterrent against unauthorized transfers and aim to protect the integrity and value of the Epcon Communities franchise system.