What happens if Epcon Communities withholds consent for a franchisee's offering?
Epcon_Communities Franchise · 2025 FDDAnswer from 2025 FDD Document
Such transfer, sale, assignment, pledge or encumbrance not having the written consent of Franchisor shall be null and void and shall constitute a material breach of this Agreement, for which Franchisor may then terminate this Agreement.
Franchisor's consent shall not be required for any Unit sold to third parties in the ordinary course of Franchisee's business.
Franchisor shall not unreasonably withhold its consent to a transfer of any interest in Franchisee or in this Epcon Communities franchise, provided, however, that prior to the time of transfer, Franchisor may, in its sole discretion, require that:
(a) All of Franchisee's accrued monetary obligations to Franchisor and all other outstanding obligations related to the business franchised hereunder shall have been satisfied, or will be satisfied through the transfer;
(b) The transferor's right to receive compensation, pursuant to any agreement or agreements for the purchase of any interest in Franchisee or in the business franchised hereunder, shall be subordinate and secondary to Franchisor's rights to receive any outstanding monetary obligation or other outstanding obligations due from transferor or Franchisee pursuant to this Agreement, and whether arising before or after the transfer;
(c) Franchisee shall have executed a general release in a form satisfactory to Franchisor, effective as of the date of transfer, of any and all claims against Franchisor and its officers, directors, shareholders, and employees in their corporate and individual capacities, including, without limitation, claims arising under federal, state and local laws, rules and ordinances.
(d) The transferee franchisee shall enter into a written assumption, in a form satisfactory to Franchisor, assuming and agreeing to discharge all of Franchisee's obligations under this Agreement prior to and after the date of the assumption;
Source: Item 23 — RECEIPTS (FDD pages 86–280)
What This Means (2025 FDD)
According to Epcon Communities' 2025 Franchise Disclosure Document, if a franchisee attempts to transfer, sell, assign, pledge, or encumber their franchise without the franchisor's written consent, such actions are considered null and void. Furthermore, these actions constitute a material breach of the Franchise Agreement, potentially leading to the termination of the agreement by Epcon Communities.
However, Epcon Communities' consent is not required for the sale of individual units to third parties within the normal course of the franchisee's business operations. Additionally, Epcon Communities agrees to not unreasonably withhold consent for a transfer of interest in the franchise.
Prior to granting consent for a transfer, Epcon Communities may require certain conditions to be met. These conditions include ensuring that all of the franchisee's accrued monetary obligations and other outstanding obligations to Epcon Communities are satisfied, either before or through the transfer. Epcon Communities may also require that the transferor's right to receive compensation from the transfer be subordinate to Epcon Communities' rights to receive any outstanding payments. The franchisee may also be required to execute a general release of claims against Epcon Communities, and the transferee must agree to assume all of the franchisee's obligations under the Franchise Agreement.