Under what circumstances related to project completion can the Epcon Communities franchise agreement be terminated?
Epcon_Communities Franchise · 2025 FDDAnswer from 2025 FDD Document
- 11.3 Franchisee agrees to use its best efforts to complete, within a reasonable time, each Unit begun in connection with any Project so that no Unit remains incomplete for more than two hundred seventy (270) days after commencement of construction.
- 11.4 In the event Franchisee's license to use the Development System at a Project is terminated prior to completion of construction of all Units in the Project, such that Franchisee is prohibited from using the Development System or any part thereof for any reason, Franchisee may, at Franchisor's sole discretion, be granted a limited license by Franchisor to complete construction of any Units then under construction if and only if (i) construction of such Unit(s) has commenced prior to the effective date of termination or alternatively such Unit(s) are the subject of a non-contingent sale-purchase contract between Franchisee and a third-party, and (ii) Franchisee pays Franchisor a Point of Closing Royalty Payment for such Unit(s) pursuant to the terms and conditions herein. In all events, 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, a franchisee's failure to complete construction within a specified timeframe can lead to the termination of their franchise agreement. Specifically, the franchisee is expected to complete each unit within a reasonable time, ensuring that no unit remains incomplete for more than 270 days after construction begins.
If the franchise agreement is terminated before all units in a project are finished, the franchisee may be granted a limited license to complete the construction of units already underway. This is contingent upon construction having started before the termination date, or if the units are subject to a non-contingent sale-purchase contract with a third party. To maintain this limited license, the franchisee must continue to pay Epcon Communities a Point of Closing Royalty Payment for each unit.
Even with a limited license, the franchisee's right to complete construction expires two years after the termination date. This provision ensures that Epcon Communities can regain control over the project and market area if the franchisee does not complete the units in a timely manner, even after the initial termination. This clause protects Epcon Communities' interests by preventing prolonged delays and ensuring consistent brand representation.