Does Epcon Communities require consent for additional owners of a franchisee business entity?
Epcon_Communities Franchise · 2025 FDDAnswer from 2025 FDD Document
- 12.2 If Franchisee is a corporation, partnership, limited liability company, or similar entity, the terms of Section 12.1 shall apply to any sale, resale, pledge, assignment, transfer or encumbrance of any voting stock of, or other ownership interest in, Franchisee.
- 12.3 In connection with any transfer for which Franchisor grants its consent as described in Section 12.1 hereof, Franchisee shall pay to Franchisor a transfer fee to cover Franchisor's actual costs, and due diligence, administrative, legal and other expenses respecting the transfer.
- 12.4 In the event that Franchisee proposes to transfer all of its interest in the Epcon Communities franchise granted pursuant hereto to a corporation, partnership, or limited liability company solely for the convenience of ownership, the provisions of Sections 12.1, 12.2, and 12.3 hereof shall not apply; provided that Franchisor's consent to such transfer may, in its sole discretion, be conditioned upon the following requirements:
- (a) The transferee entity shall be newly organized and its Articles of Incorporation and Bylaws (or comparable governing documents for entities other than corporations) shall provide that its activities are confined exclusively to operate the business franchised hereunder and activities related thereto;
- (b) Franchisee shall identify to Franchisor all of the stockholders, directors, officers, partners and/or members of the transferee entity;
- (c) Franchisee shall enter into an agreement, in a form satisfactory to Franchisor, unconditionally guaranteeing the full payment and performance of the transferee entity's obligations to Franchisor;
- (d) Each stock (or other ownership interest) certificate of the transferee entity shall have conspicuously endorsed upon its face the following legend:
Source: Item 5 — INITIAL FEES (FDD pages 15–16)
What This Means (2025 FDD)
According to Epcon Communities' 2025 Franchise Disclosure Document, if a franchisee operates as a corporation, partnership, limited liability company, or similar entity, any sale, resale, pledge, assignment, transfer, or encumbrance of any voting stock or other ownership interest in the franchisee is subject to the terms outlined in Section 12.1 of the franchise agreement.
This means that if a franchisee wishes to transfer ownership, sell stock, or otherwise alter the ownership structure of their business entity, the conditions specified in Section 12.1 apply. While the document does not explicitly state that Epcon Communities' consent is required for each additional owner, it does state that Section 12.1 applies to any transfer of ownership interest.
Furthermore, if a franchisee proposes to transfer their franchise interest to a corporation, partnership, or limited liability company solely for ownership convenience, Sections 12.1, 12.2, and 12.3 may not apply, provided that Epcon Communities' consent to such a transfer can be conditioned upon certain requirements. These requirements include the transferee entity being newly organized with activities confined to operating the franchised business, identification of all owners of the transferee entity, and the franchisee entering into an agreement guaranteeing the transferee entity's obligations. Additionally, each ownership certificate of the transferee entity must bear a specific legend indicating the transfer is subject to the franchise agreement terms.