After termination of the Epcon Communities franchise agreement, what is the franchisee prohibited from doing with the Development System?
Epcon_Communities Franchise · 2025 FDDAnswer from 2025 FDD Document
This Agreement shall automatically terminate on the effective date of any termination or expiration of the Franchise Agreement. Franchisee shall be prohibited from using the Development System or any part thereof for any reason thereafter; provided, however, that if Franchisee is then current on all payments of Minimum Monthly Royalty payments and Point of Closing Royalty payments to Franchisor, Franchisor may grant Franchisee a limited license, which shall exclude the Limited Rights, to complete construction of any Unit(s) in the Project previously identified in this Market Area Agreement, provided Franchisee pays Franchisor a Point of Closing Royalty Payment for such Unit(s), Minimum Monthly Royalty payments and the Marketing Program Fees, pursuant to the terms and conditions set forth in the Franchise Agreement and otherwise remains, during the term of the limited license, in full compliance with the terms and conditions set forth in the Franchise Agreement. Notwithstanding anything to the contrary herein, Franchisee's right to complete construction of such Unit(s) shall expire two (2) years after the effective date of termination.
Source: Item 23 — RECEIPTS (FDD pages 86–280)
What This Means (2025 FDD)
According to the 2025 Epcon Communities Franchise Disclosure Document, upon termination or expiration of the Franchise Agreement, the franchisee is generally prohibited from using the Development System for any reason. This means the franchisee cannot utilize Epcon Communities' proprietary methods, systems, plans, materials, or designs related to real estate development.
However, there is a conditional exception. If the franchisee is current on all Minimum Monthly Royalty payments and Point of Closing Royalty payments, Epcon Communities may grant a limited license to complete construction of any units in a project previously identified in the Market Area Agreement. This limited license excludes the Limited Rights. To maintain this license, the franchisee must continue to pay Point of Closing Royalty Payments for the units, Minimum Monthly Royalty payments, and Marketing Program Fees, and remain in full compliance with the terms of the Franchise Agreement.
Even with this limited license, the franchisee's right to complete construction expires two years after the termination date. After this two-year period, the franchisee is again fully prohibited from using the Development System. This ensures that after a defined period, the franchisee no longer benefits from Epcon Communities' intellectual property unless a new agreement is established.