When is the Epcon Communities Point of Closing Royalty Payment due?
Epcon_Communities Franchise · 2025 FDDAnswer from 2025 FDD Document
roject | |
| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| which the franchisee failed to de-identify its project. | your project and remove any use of the Marks. | ||
| Technology Royalty Fee | If you signed a Technology Royalty Addendum, you must pay us a technology royalty fee of $1,500 for each Unit you sell. Additional $200 per hour fee for costs to make changes to our architectural plans if we grant approval to the changes. | Royalty due upon closing of sale of each Unit in a Project; Fee to change architectural plans due within 30 d |
Source: Item 6 — OTHER FEES (FDD pages 16–22)
What This Means (2025 FDD)
According to Epcon Communities' 2025 Franchise Disclosure Document, the Point of Closing Royalty Payment is due each time a franchisee closes on the sale of a Unit in their project. The royalty is calculated by multiplying the Applicable Percentage by the gross sales price of the Unit, including both real and personal property, as detailed in the Settlement Statement or Settlement Disclosure Form. The FDD specifies that in no event will the Point of Closing Royalty Payment be less than $3,000 per Unit.
The Applicable Percentage varies based on the number of Units for which a sale is closed in a calendar year. For instance, if a franchisee closes on 1 to 6 Units, the Applicable Percentage is 2.0%. This percentage decreases as the number of closed Units increases, reaching 1% for 51 or more Units closed in a calendar year. The FDD also notes that Epcon Communities has the right to increase the percentage to 3.5% if a franchisee violates the terms of their Franchise Agreement relating to the transfer of their franchise or ownership interest.
Epcon Communities may offer a volume-based reduction to the Point of Closing Royalty Payments for top-performing franchisees. To qualify, franchisees must be in the top 15% based on total Point of Closing Royalty Payments paid over the previous three calendar years, have closed on at least 100 Units during that period, and have paid more than $500,000 in total Point of Closing Royalty Payments. Qualifying Franchisees that closed from 50 Units through 99 Units in the previous calendar year will pay Point of Closing Royalty Payments on the first 12 Units closed in the current calendar year using 1.50% as the Applicable Percentage. Qualifying Franchisees that closed 100 or more Units in the previous calendar year will pay Point of Closing Royalty Payments on the first 24 Units closed in the current calendar year using 1.25% as the Applicable Percentage.
Furthermore, Epcon Communities retains the right to cap the Gross Sales Price of any Unit when determining the maximum amount of Point of Closing Royalty Payments. If a Unit is sold for a price exceeding this cap, the royalty payment will be based on the capped amount. The franchisee will be notified if Epcon Communities chooses to implement such a cap, which becomes effective immediately upon notice. The FDD also states that if the franchisee pays the Point of Closing Royalty Payment for a Unit, Epcon Communities will, at the franchisee's request and expense, sign a partial mortgage release and/or partial security interest release for that Unit.