What constitutes a 'Project' under the Epcon Communities franchise agreement?
Epcon_Communities Franchise · 2025 FDDAnswer from 2025 FDD Document
hereto cannot mutually agree on a Market Area within eighteen (18) months of the Effective Date, then this Initial Market Area and the Franchise Agreement shall automatically terminate and Franchisor and Franchisee shall release each other of any future obligations under this Initial Market Area Agreement and the Franchise Agreement, whether monetary or otherwise, except for those provisions that specifically survive termination.
The Initial Market Area for this Initial Market Area Agreement shall be as depicted on the map attached hereto as Exhibit "A" and incorporated herein for all purposes.
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- Franchisor, having granted to Franchisee a license to use the Development System pursuant to the terms and conditions of the Franchise Agreement, desires to further protect its materials, reputation, and goodwill and to geographically limit use by Franchisee of the Development System in an ordered and controlled manner. Franchisee agrees that such restrictions are essential to the success of the Project and the projects of other franchisees and licensees of Franchisor.
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- Franchisee agrees to fully implement the Development System only within the Initial Market Area depicted on Exhibit "A". Franchisee agrees that Franchisor's review and expressed opinion about any Project location proposed by Franchisee is only Franchisor's opinion respecting how the site meets Franchisor's criteria for locations for Epcon Communities Projects and is based upon Franchisor's limited information about Franchisee's Initial Market Area. It does not constitute a representation, warranty, or an acknowledgment by Franchisor or any employee or agent of Franchisor that an Epcon Communities Project at the proposed location will be successful.
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- Franchisee shall make all payments specified in the Franchise Agreement to Franchisor.
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- Franchisee shall not use or allow to be used the Development System anywhere except at the agreed location within the Initial Market Area specified in this Initial Market Area Agreement executed by and between Franchisor and Franchisee. Franchisee agrees that any unauthorized and unacknowledged use would be in violation of the terms of this Initial Market Area Agreement and of the Franchise Agreement and further agrees that any such breach shall afford to Franchisor each of the rights and remedies set forth in the Franchise Agreement.
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Source: Item 23 — RECEIPTS (FDD pages 86–280)
What This Means (2025 FDD)
Based on the 2025 Epcon Communities Franchise Disclosure Document, a 'Project' refers to the development and construction of an Epcon Communities project, typically within a designated market area. The success of these projects relies on the franchisee's implementation of Epcon Communities' Development System. Franchisees agree that restrictions on where they can use the Development System are essential to the success of their project and the projects of other franchisees.
According to the FDD, franchisees must fully implement the Development System within their Initial Market Area, as depicted on an exhibit. Epcon Communities' review of a proposed project location is only an opinion based on their criteria and limited information, not a guarantee of success. The franchisee ultimately decides whether to proceed with a project based on their own analysis. The franchisee must also use their best efforts to complete each unit within a reasonable time, not exceeding 270 days after construction begins.
If a franchisee's license to use the Development System is terminated before a project is completed, Epcon Communities may grant a limited license to finish construction, provided construction had already started or the unit is under a non-contingent sale-purchase contract. In such cases, the franchisee must pay a Point of Closing Royalty Payment. The right to complete construction expires two years after the termination date. The agreement emphasizes that the rights and duties are personal to the franchisee, and Epcon Communities has granted the franchise based on the franchisee's skills, reputation, and financial capability.
In the context of assigning franchise rights, a project is central to the transfer of obligations. If an assignee decides to use the Development System to complete unfinished projects after an assignor's default, the assignee assumes the assignor's obligations related to the Epcon Communities project. A Sublicensee also agrees to be bound by the obligations under the Franchise Agreement as they relate to the Epcon Communities project developed by the Sublicensee.