What happens if the Epcon Communities Debtor fails to discharge taxes on the collateral?
Epcon_Communities Franchise · 2025 FDDAnswer from 2025 FDD Document
nd (ii) so long as no Event of Default has occurred and is continuing, sales or other dispositions permitted by the Franchise Documents.
-
- Insurance. The Debtor will maintain with financially sound and reputable insurers insurance with respect to its properties and business against such casualties and contingencies as shall be in accordance with general practices of businesses engaged in similar activities in similar geographic areas.
-
- Collateral Protection Expenses; Preservation of Collateral. In the Secured Party's discretion (but without obligation), if the Debtor fails to do so, the Secured Party may discharge taxes and other encumbrances at any time levied or placed on any of the Collateral, maintain any of the Collateral, make repairs thereto and pay any necessary filing fees or insurance premiums. The Debtor agrees to reimburse the Secured Party on demand for all expenditures so made. The Secured Party shall have no obligation to the Debtor to make any such expenditures, nor shall the making thereof be construed as the waiver or cure of any Event of Default.
-
- Power of Attorney. The Debtor hereby irrevocably constitutes and appoints the Secured Party and any officer or agent thereof, with full power of substitution, as its true and lawful attorneys-in-fact with full irrevocable power and authority in the place and stead of the Debtor or in the Secured Party's own name, for the purpose of carrying out the terms of this Agreement, to take any and all appropriate action and to execute any and all documents and instruments that may be necessary or useful to accomplish the purposes of this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 86–280)
What This Means (2025 FDD)
According to Epcon Communities' 2025 Franchise Disclosure Document, if the Debtor fails to discharge taxes or other encumbrances levied on the collateral, Epcon Communities, as the Secured Party, has the option, but not the obligation, to discharge these taxes and encumbrances. Epcon Communities can also maintain the collateral, make repairs, and pay necessary filing fees or insurance premiums.
In such a scenario, the Debtor is obligated to reimburse Epcon Communities on demand for all expenditures made in discharging taxes, maintaining the collateral, or covering related expenses. However, Epcon Communities is not obligated to make these expenditures, and doing so does not waive any event of default by the Debtor.
Furthermore, the Debtor grants Epcon Communities a power of attorney, allowing them to take actions and execute documents necessary to fulfill the agreement's terms. This power of attorney enables Epcon Communities to protect its interests in the collateral, but it does not impose a duty on Epcon Communities to exercise these powers. Epcon Communities is only accountable for the amounts it actually receives from exercising these powers and is not liable for any actions or failures to act, except in cases of gross negligence or willful misconduct.