What events will automatically terminate the exclusivity rights granted to an Epcon Communities franchisee under the Market Area Agreement?

According to Epcon Communities' 2025 Franchise Disclosure Document, the exclusivity rights granted to a franchisee for a particular Market Area under the Market Area Agreement will automatically terminate under specific circumstances. These circumstances include the franchisee's failure to comply with the Franchise Agreement and Market Area Agreement. Additionally, the exclusivity terminates when the franchisee completes all buildings in their project. The rights also end if the franchisee's rights to use the Development System are terminated. Finally, the exclusivity ends if the franchisee alleges they have rights in Epcon Communities' copyrighted works.

Once the exclusive rights to the Market Area expire, Epcon Communities and its affiliates have the right to construct projects within the former franchisee's Market Area. Epcon Communities also has the right to license or franchise the rights to construct projects using the Development System in that Market Area. This means that the franchisee's protection from competition by Epcon Communities or other franchisees in their designated area is contingent upon their compliance with the agreements and the completion of their project.

This clause is important for prospective franchisees to understand, as it outlines the conditions under which their exclusive territory can be revoked. Franchisees need to ensure they adhere to all terms of both the Franchise Agreement and the Market Area Agreement to maintain their exclusive rights. Furthermore, the completion of the project triggers the end of exclusivity, which may impact long-term development plans. The potential for Epcon Communities or other franchisees to enter the market after the project's completion should be considered when evaluating the investment.