Is involvement in other Epcon Communities projects by other franchisee business entities an exception to the real estate development restrictions?
Epcon_Communities Franchise · 2025 FDDAnswer from 2025 FDD Document
- 10.6 Franchisee shall not, during the term of this Agreement, without the prior written consent of Franchisor, 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 age-restricted or for which the targeted buyers are the 55+ home buyer, and includes, without limitation, 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 Franchisor's Development System; provided however, this provision shall not apply to the involvement by Franchisee in the development of other Epcon Communities Projects by other franchisee business entities, or to any ownership by Franchisee 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, there is an exception to the real estate development restrictions. The standard franchise agreement restricts franchisees from owning, developing, or constructing real estate projects that target the 55+ home buyer demographic, including ranch-style homes similar to those in Epcon Communities' Development System. This restriction applies during the term of the agreement and requires prior written consent from Epcon Communities for any such involvement.
However, this restriction does not apply if a franchisee is involved in the development of other Epcon Communities projects through other franchisee business entities. This means that franchisees can participate in projects managed by fellow Epcon Communities franchisees without violating the agreement. Additionally, the restriction does not apply to ownership of less than three percent (3%) of the outstanding stock of any publicly held corporation.
This exception allows Epcon Communities franchisees some flexibility to invest in or collaborate on projects within the Epcon Communities network without needing specific approval from the franchisor, provided it's through another franchisee's entity. This could foster collaboration and investment within the franchise system. However, franchisees should ensure their involvement remains within the bounds of the exception to avoid breaching the agreement.