What is an Epcon Communities franchisee prohibited from doing with the Development System after the termination of the franchise agreement?
Epcon_Communities Franchise · 2025 FDDAnswer from 2025 FDD Document
- This Agreement shall automatically terminate on the effective date of any termination or expiration of the Franchise Agreement. Franchisee shall be prohibited from using the Development System or any part thereof for any reason thereafter; provided, however, that if Franchisee is then current on all payments of Minimum Monthly Royalty payments and Point of Closing Royalty payments to Franchisor, Franchisor may grant Franchisee a limited license, which shall exclude the Limited Rights, to complete construction of any Unit(s) in the Project previously identified in this Market Area Agreement, provided Franchisee pays Franchisor a Point of Closing Royalty Payment for such Unit(s), Minimum Monthly Royalty payments and the Marketing Program Fees, pursuant to the terms and conditions set forth in the Franchise Agreement and otherwise remains, during the term of the limited license, in full compliance with the terms and conditions set forth in the Franchise Agreement. Notwithstanding anything to the contrary herein, Franchisee's right to complete construction of such Unit(s) shall expire two (2) years after the effective date of termination.
Source: Item 23 — RECEIPTS (FDD pages 86–280)
What This Means (2025 FDD)
According to the 2025 Epcon Communities Franchise Disclosure Document, a franchisee is generally prohibited from using the Development System after the termination or expiration of the Franchise Agreement. Specifically, upon termination, the franchisee cannot use the Development System or any part of it for any reason. This includes the Epcon Communities Works and the Marks. This restriction is in place to protect Epcon Communities's proprietary information and brand identity.
However, there is a conditional exception. If the franchisee is current on all Minimum Monthly Royalty payments and Point of Closing Royalty payments, Epcon Communities may grant a limited license to complete construction of any Unit(s) in a Project previously identified in the Market Area Agreement. This limited license excludes the Limited Rights. To obtain this license, the franchisee must pay a Point of Closing Royalty Payment for the Unit(s), continue Minimum Monthly Royalty payments and Marketing Program Fees, and remain in full compliance with the terms of the Franchise Agreement during the term of the limited license.
Even with this limited license, the franchisee's right to complete construction of the Unit(s) expires two years after the effective date of termination. This time limit ensures that even franchisees completing existing projects do not continue to operate indefinitely under the Epcon Communities system after the franchise agreement has ended. This is a fairly standard practice in franchising, as franchisors need to protect their brand and system after a franchisee leaves the system.