What is an Epcon Communities debtor obligated to do regarding claims against the collateral?
Epcon_Communities Franchise · 2025 FDDAnswer from 2025 FDD Document
The Debtor further covenants with the Secured Party as follows: (a) the Collateral, to the extent not delivered to the Secured Party, will be kept at its address listed on the signature page hereof and the Debtor will not remove the Collateral from such location, without providing at least thirty days prior written notice to the Secured Party, (b) except for the security interest herein granted and liens permitted by the Franchise Documents, the Debtor shall be the owner of the Collateral free from any right or claim of any other person, lien, security interest or other encumbrance, and the Debtor shall defend the same against all claims and demands of all persons at any time claiming the same or any interests therein adverse to the Secured Party, (c) the Debtor shall not pledge, mortgage or create, or suffer to exist any right of any person in or claim by any person to the Collateral, or any security interest, lien or encumbrance in the Collateral in favor of any person, other than the Secured Party except for liens permitted by the Franchise Documents, (d) the Debtor will keep the Collateral in good order and repair and will not use the same in violation of law or any policy of insurance thereon, (e) the Debtor will permit the Secured Party, or its designee, to inspect the Collateral at any reasonable time, wherever located, and (f) the Debtor will not sell or otherwise dispose, or offer to sell or otherwise dispose, of the Collateral or any interest therein except for (i) sales of inventory and licenses of general intangibles in the ordinary course of business and (ii) so long as no Event of Default has occurred and is continuing, sales or other dispositions permitted by the Franchise Documents.
Source: Item 23 — RECEIPTS (FDD pages 86–280)
What This Means (2025 FDD)
According to the 2025 Epcon Communities Franchise Disclosure Document, if a franchisee (the Debtor) provides collateral for obligations to Epcon Communities (the Secured Party), the franchisee must adhere to specific covenants regarding that collateral.
The franchisee must keep the collateral at the address listed on the signature page of the agreement and cannot remove it without providing at least 30 days' prior written notice to Epcon Communities. The franchisee must maintain ownership of the collateral, free from any other claims or liens, except those permitted by the franchise documents, and must defend the collateral against any adverse claims. The franchisee is prohibited from pledging, mortgaging, or allowing any other person to have a claim or security interest in the collateral, again with exceptions for liens permitted by the Franchise Documents.
The franchisee is obligated to keep the collateral in good order and repair and use it in compliance with all laws and insurance policies. Epcon Communities, or its designee, has the right to inspect the collateral at any reasonable time, regardless of its location. Lastly, the franchisee cannot sell or dispose of the collateral, except for sales of inventory and licenses of general intangibles in the ordinary course of business, or as otherwise permitted by the Franchise Documents, provided no event of default has occurred.