Under what circumstances is an Epcon Communities franchisee considered in default if they become insolvent?
Epcon_Communities Franchise · 2025 FDDAnswer from 2025 FDD Document
Article 13
Default; Termination
- 13.1 If Franchisee becomes insolvent or makes an assignment for the benefit of creditors, or if a petition in bankruptcy is filed by Franchisee, or such a petition is filed against Franchisee and either is consented to by Franchisee or is not dismissed within thirty (30) days, or if a bill in equity or other proceeding for the appointment of a receiver of Franchisee or other custodian for Franchisee's business or assets is filed and either is consented to by Franchisee or is not dismissed within thirty (30) days, or a receiver or other custodian of Franchisee's property or any part thereof is appointed by a court of competent authority, or if proceedings for composition with creditors under any state or federal law should be instituted by or against Franchisee or if the real or personal property of Franchisee or a Sublicensee shall be sold after levy thereupon by any sheriff, marshal, or constable, then upon the occurrence of any of such events, Franchisee shall be deemed to be in default under this Agreement and all rights granted by Franchisor hereunder (including but not limited to any licenses to utilize the Development System, the Epcon Communities Works and the Marks) shall thereupon terminate without any need for notice to Franchisee, and this Agreement shall thereupon be terminated.
Source: Item 23 — RECEIPTS (FDD pages 86–280)
What This Means (2025 FDD)
According to Epcon Communities' 2025 Franchise Disclosure Document, a franchisee is considered in default under the Franchise Agreement under specific insolvency-related circumstances. These include becoming insolvent, making an assignment for the benefit of creditors, or having a bankruptcy petition filed by or against them, where the franchisee consents to the petition or it is not dismissed within 30 days.
Further default conditions arise if a bill in equity or other proceeding is initiated to appoint a receiver or custodian for the franchisee's business or assets, and the franchisee consents or the matter isn't dismissed within 30 days. The appointment of a receiver or custodian by a competent court also triggers default. Similarly, if proceedings for composition with creditors are instituted by or against the franchisee under state or federal law, or if the franchisee's real or personal property is sold following a levy by a sheriff, marshal, or constable, the franchisee is deemed in default.
Upon the occurrence of any of these events, all rights granted to the franchisee by Epcon Communities, including licenses to use the Development System, Epcon Communities Works, and the Marks, immediately terminate without notice. The Franchise Agreement is also immediately terminated under these conditions. This means that if a franchisee faces severe financial distress leading to any of the listed insolvency events, Epcon Communities can immediately terminate the franchise agreement and all associated rights.