Under what condition is the Assignee not obligated to inscribe stock certificates with a legend referencing agreements related to the Epcon Communities franchise?
Epcon_Communities Franchise · 2025 FDDAnswer from 2025 FDD Document
Assignee hereby accepts the Assignment and, if, upon the default by Assignor under the Loan Agreements, Assignee decides to use the Development System to complete any unfinished Project(s), assumes, and agrees to be bound by all of Assignor's obligations under the Franchise Agreement as such obligations relate to the Epcon Communities project developed by Assignor and such of Assignor's obligations under the Franchise Agreement and the Market Area Agreement as are corresponding with the right, title, and interest transferred to Assignee in Section 1 hereof (hereinafter, the "Obligations"). Assignee shall promptly communicate in writing to Epcon Communities its decision respecting assumption of the Obligations as franchisee under the Franchise Agreement and the Market Area Agreement. If Assignee, in full compliance with the terms of the Franchise Agreement and the Market Area Agreement uses the Development System to complete a Project or Projects, Assignee shall have no obligation to Epcon Communities to cause Assignee's stock certificates or other certificates evidencing ownership to be inscribed with a legend referencing the Franchise Assignment Agreement, the Lender Agreement, or the Market Area Agreement.
Source: Item 23 — RECEIPTS (FDD pages 86–280)
What This Means (2025 FDD)
According to Epcon Communities' 2025 Franchise Disclosure Document, an Assignee is not required to inscribe stock certificates with a legend referencing the Franchise Assignment Agreement, Lender Agreement, or Market Area Agreement under specific conditions related to project completion following an assignor's default.
Specifically, this exception applies if the Assignee, in full compliance with the terms of the Franchise Agreement and the Market Area Agreement, decides to use the Epcon Communities Development System to complete a project or projects that were unfinished due to the Assignor's default under Loan Agreements. This provision is designed to facilitate the smooth continuation of projects under financial distress without imposing additional administrative burdens on the Assignee related to stock certificate legends.
This condition provides a benefit to the Assignee by waiving the usual requirement of inscribing stock certificates, streamlining the process of taking over and completing distressed projects. However, it is crucial that the Assignee adheres strictly to the terms of the Franchise Agreement and the Market Area Agreement to qualify for this exception. This ensures that the integrity of the Epcon Communities system is maintained even during project transitions.