Under what circumstances related to insolvency or bankruptcy would an Epcon Communities franchisee be considered in default?
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 the 2025 FDD, an Epcon Communities franchisee will be considered in default if certain insolvency or bankruptcy-related events occur. Specifically, if the franchisee becomes insolvent, makes an assignment for the benefit of creditors, or if a bankruptcy petition is filed by or against the franchisee and not dismissed within thirty days, it constitutes default.
Additionally, the franchisee is in default if a bill in equity or other proceeding is initiated for the appointment of a receiver or custodian for the franchisee's business or assets, and it is either consented to by the franchisee or not dismissed within thirty days. The appointment of a receiver or custodian by a court also triggers default. Furthermore, if proceedings for composition with creditors are instituted by or against the franchisee, or if the franchisee's real or personal property is sold after levy by a sheriff, marshal, or constable, the franchisee is considered 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, the Epcon Communities Works, and the Marks, will terminate immediately without notice. The Franchise Agreement will also be terminated at that time. However, an addendum to the franchise agreement for the state of Maryland modifies this provision, stating that the termination upon bankruptcy may not be enforceable under federal bankruptcy law.