How can the license agreement between Epcon Communities and IP86 be terminated?
Epcon_Communities Franchise · 2025 FDDAnswer from 2025 FDD Document
Our license agreement with IP86 is in effect until December 31, 2025, and renews automatically for successive one (1) year periods, unless prior to the expiration of the term, we or IP86 gives the other party at least three (3) months prior written notice of termination. Additionally, the agreement may be terminated if: (1) we fail to pay royalty payments under the license agreement when they are due; (2) any of the following relating to bankruptcy occur: (i) we make an assignment for the benefit of creditors or enter into an arrangement with our creditors, (ii) a receiver, custodian, trustee or liquidator is appointed for us or for a material part of our properties, or proceedings are commenced seeking appointment of a receiver, custodian, trustee or liquidator and is not dismissed within 60 days, (iii) a voluntary bankruptcy petition is filed by us or on our behalf, (iv) we suffer an order for relief under federal bankruptcy law or apply for, consent to or authorize an application of any bankruptcy, reorganization, arrangement, readjustment of debt, insolvency, dissolution, liquidation or other similar law, or proceedings are commenced seeking an application and is not dismissed within sixty (60) days, (v) a material part of our properties are attached or subjected to a lien, which is not removed within sixty (60) days, (vi) we do not pay our debts as they become due, (vii) we conceal or remove a material part of our assets, with an intent to hinder or delay our creditors, or (viii) we transfer a material part of our property for the benefit of a creditor at a time when other similar creditors have not been paid, or (3) we fail to cure a default under the license agreement. Termination of the license agreement with IP86 will not materially alter your rights to use the trademarks.
Source: Item 13 — TRADEMARKS (FDD pages 50–53)
What This Means (2025 FDD)
According to Epcon Communities' 2025 Franchise Disclosure Document, the license agreement with IP86, which grants Epcon Communities the right to use and license trademarks to franchisees, is initially in effect until December 31, 2025. After this date, the agreement automatically renews for successive one-year periods. Either Epcon Communities or IP86 can prevent this renewal by providing at least three months' prior written notice of termination before the expiration of the current term. This means that if either party wishes to terminate the agreement on December 31, 2025, they must notify the other party in writing by September 30, 2025. This provides a window for franchisees to be aware of any potential changes to trademark usage.
Beyond the expiration date, the license agreement can be terminated under specific conditions. One condition is the failure by Epcon Communities to pay royalty payments under the license agreement when they are due. Additionally, certain bankruptcy-related events can trigger termination, including making an assignment for the benefit of creditors, the appointment of a receiver, the filing of a voluntary bankruptcy petition, or the attachment of a material part of Epcon Communities' properties. These bankruptcy events must meet specific criteria, such as not being dismissed within 60 days or the lien not being removed within 60 days. Finally, failure by Epcon Communities to cure a default under the license agreement also constitutes grounds for termination.
It is important to note that the FDD states that termination of the license agreement with IP86 will not materially alter a franchisee's rights to use the trademarks. This suggests that Epcon Communities has measures in place to ensure continued trademark usage rights for franchisees even if the agreement with IP86 is terminated. However, prospective franchisees should seek clarification from Epcon Communities on the specific mechanisms that guarantee these rights and the potential impact of such a termination on their franchise operations. Understanding these details is crucial for assessing the long-term stability and security of the franchise agreement.