What are the exceptions to the real estate development restrictions for the Epcon Communities agreement?
Epcon_Communities Franchise · 2025 FDDAnswer from 2025 FDD Document
The undersigned agrees that it shall not, during the term of Franchise Agreement, without the prior written consent of Epcon Communities Franchising, LLC, directly or indirectly, either as a principal, agent, employee, officer, director or member of any corporation or other business entity, as a partner or sole proprietor, or in any other way, own, develop, construct or have any interest in any real estate development project that is agerestricted or for which the targeted buyers are the 55+ home buyer, and includes, but is not limited to, detached and/or attached ranch-style homes (with or without basements or a second floor) that are similar to the homes and communities depicted in Epcon Communities Franchising, LLC's Development System; provided however, this provision shall not apply to the involvement by the undersigned in the development of other Epcon Communities Projects by other franchisee business entities, or to any ownership by the undersigned of less than three percent (3%) of the outstanding stock of any publicly held corporation.
Source: Item 23 — RECEIPTS (FDD pages 86–280)
What This Means (2025 FDD)
According to Epcon Communities' 2025 Franchise Disclosure Document, franchisees are restricted from owning, developing, or constructing real estate projects that target the 55+ home buyer demographic or that are similar to Epcon Communities' developments. This restriction is in place during the term of the agreement, and requires prior written consent from Epcon Communities for any such activities. However, there are a couple of exceptions to this restriction.
Specifically, the restriction does not apply to a franchisee's involvement in the development of other Epcon Communities projects through other franchisee business entities. This means that franchisees can collaborate with each other on different Epcon Communities projects without violating the agreement. Additionally, the restriction does not apply to any ownership by the franchisee of less than three percent (3%) of the outstanding stock of any publicly held corporation. This allows franchisees to invest in publicly traded companies that may have real estate development interests without needing prior approval, as long as their ownership stake remains below the 3% threshold.
These exceptions provide some flexibility for Epcon Communities franchisees to engage in other business and investment activities without conflicting with their franchise agreement. However, it's important for prospective franchisees to fully understand the scope of these restrictions and exceptions, and to seek written consent from Epcon Communities for any activities that may potentially fall outside of these defined exceptions. This ensures compliance with the franchise agreement and avoids any potential disputes or breaches.