How is the Point of Closing Royalty Payment determined for Epcon Communities?
Epcon_Communities Franchise · 2025 FDDAnswer from 2025 FDD Document
the "Applicable Percentage") multiplied by the Gross Sales Price of such Unit as provided in the applicable Settlement Statement or the total of the "Sale Price of the Property" and the "Sale Price of any personal property included in sale" in the Settlement Disclosure Form, or such lower amount, if applicable as provided in Section 5.2(d)(ii) (the "Point of Closing Royalty Payment"). However, in no event shall the Point of Closing Royalty Payment for each Unit be less than Three Thousand Dollars ($3,000.00), including instances in which there is a Volume-Based Reduction to Point of Closing Royalty Payments or Cap on Calculation of Point of Closing Royalty Payments, as described in subsection (ii) and (iii) below. No later than two days prior to a Unit's closing,
a Settlement Statement or Settlement Disclosure Form, reflecting the applicable Point of Closing Royalty Payment for such Unit, shall be provided to Franchisor. Upon Franchisor's receipt of each Point of Closing Royalty Payment, Franchisor will, at Franchisee's request and expense, promptly deliver a partial mortgage release and/or partial security interest release releasing Franchisor's lien as against the applicable Unit.
| Point of Closing Royalty Percentage Table | |||
|---|---|---|---|
| Unit Closings in any of Franchisee's Projects in a Calendar Year | Percentage Applicable to Unit Closings for that Calendar Year | ||
| 1-6 | 2.00 | ||
| 7-12 | 1.75 | ||
| 13-24 | 1.50 | ||
| 25-50 | 1.25 | ||
| 51 and more | 1.00 |
- (ii) Volume–Based Reduction to Point of Closing Royalty Payments: At the beginning of each calendar year, Franchisor may, in its sole discretion, rank all franchisees on the basis of the total amount of Point of Closing Royalty Payments paid Franchisor over the course of the previous three calendar year
Source: Item 23 — RECEIPTS (FDD pages 86–280)
What This Means (2025 FDD)
According to the 2025 Epcon Communities FDD, the Point of Closing Royalty Payment is determined based on a percentage of the gross sales price of each unit. However, the FDD excerpts provided do not include the specific percentage used to calculate this royalty. The FDD does state that the Point of Closing Royalty Payment will not be less than $3,000 per unit, even if there are volume-based reductions or caps on the calculation.
Epcon Communities may offer a volume-based reduction to the Point of Closing Royalty Payments to Qualifying Franchisees. At the beginning of each calendar year, Epcon Communities may rank all franchisees based on the total amount of Point of Closing Royalty Payments paid over the previous three calendar years. The top 15% of franchisees who have closed at least 100 units and paid more than $500,000 in total Point of Closing Royalty Payments in the previous three calendar years may receive a reduction in the Point of Closing Royalty Percentage for that calendar year.
For Qualifying Franchisees that closed from 50 to 99 units in the previous calendar year, Epcon Communities will use 1.50 as the Applicable Percentage on the first 12 units closed in the current calendar year. For Qualifying Franchisees that closed 100 or more units in the previous calendar year, Epcon Communities will use 1.25 as the Applicable Percentage on the first 24 units closed in the current calendar year. Epcon Communities may also limit the Gross Sales Price of any unit for the purpose of calculating the Point of Closing Royalty Payments, as well as limit the total amount of Point of Closing Royalty Payments made by a franchisee in a calendar year.
Prospective franchisees should ask Epcon Communities for the specific Point of Closing Royalty Percentage, how it is calculated, and under what circumstances the franchisor might adjust the gross sales price or limit the total royalty payments in a given year. Understanding these factors is crucial for projecting costs and potential profitability.