When transferring ownership, what documentation regarding the transferee entity's governance must be provided to Epcon Communities for approval?
Epcon_Communities Franchise · 2025 FDDAnswer from 2025 FDD Document
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;
Source: Item 23 — RECEIPTS (FDD pages 86–280)
What This Means (2025 FDD)
According to Epcon Communities' 2025 Franchise Disclosure Document, if a franchisee proposes to transfer their franchise interest to a corporation, partnership, or limited liability company for ownership convenience, the franchisee must provide copies of the transferee entity's governing documents to Epcon Communities for approval before the transfer. These documents include the Articles of Incorporation and Bylaws for corporations, or comparable governing documents for other entity types.
Epcon Communities requires that these governing documents stipulate that the entity's activities are exclusively confined to operating the franchised business and related activities. This ensures that the transferee entity remains focused on the Epcon Communities franchise and does not engage in unrelated business ventures that could potentially conflict with the franchise agreement.
Additionally, the franchisee must identify all stockholders, directors, officers, partners, and/or members of the transferee entity to Epcon Communities. This allows Epcon Communities to assess the individuals involved in the transferee entity and ensure they meet the franchisor's standards. The franchisee must also enter into an agreement guaranteeing the transferee entity's obligations to Epcon Communities. This guarantee provides Epcon Communities with additional security that the transferee entity will fulfill its financial and operational responsibilities under the franchise agreement.