Under what condition will the obligations of the Epcon Communities franchisee to pay the Technology Royalty cease?
Epcon_Communities Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Grant of Sublicense. Franchisee hereby expressly grants to Sublicensee a limited, nontransferable and royalty free sublicense to use the Development System, Epcon Communities Works and the Marks solely in connection with the development and marketing of an Epcon Communities project pursuant to a Market Area Agreement to be executed by and between Sublicensee and Franchisor and subject to the terms and conditions set forth in the Franchise Agreement and this Sublicense Agreement. Compliance with all terms and conditions of this Sublicense Agreement, is a strict condition precedent to this sublicense. This sublicense shall not include the grant of rights to, or the imposition of obligations upon, Franchisee provided under Sections 3.4 or 4.1 of the Franchise Agreement. Article 21 of the Franchise Agreement shall not be included in the sublicense hereunder. The Franchise Agreement shall remain in full force and effect subsequent to execution of this Sublicense Agreement. Notwithstanding the foregoing, this Section 1 shall not prevent the Sublicensee from using those materials provided by Franchisor to Franchisee pursuant to Section 4.1 of the Franchise Agreement.
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- Acceptance of Sublicense and Assumption of the Obligations. Sublicensee hereby accepts the sublicense described in Section 1 hereof and, as of the date hereof, assumes, and agrees to be bound by, all of Franchisee's obligations under the Franchise Agreement and any related agreements as such obligations relate to the Epcon Communities project developed by Sublicensee.
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- Term. Except as provided in Section 5 of this Sublicense Agreement, the sublicense granted pursuant to Section 1 of this Sublicense Agreement shall remain in full force and effect until the earlier of (a) the date of the sale of the last unit of Sublicensee's Epcon Communities project (b) the date that is one year after the completion of construction (as defined by Section 11.1 of the Franchise Agreement) of the last unit of Sublicensee's Epcon Communities project or (c) the date of the termination of the Franchise Agreement (the "Term").
Source: Item 23 — RECEIPTS (FDD pages 86–280)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, the obligations of an Epcon Communities franchisee to pay the Technology Royalty will cease under specific conditions related to a sublicense agreement. According to Item 23, a franchisee can grant a sublicense to a third party (Sublicensee) to develop and market an Epcon Communities project.
The sublicense includes a limited, non-transferable, and royalty-free license for the Sublicensee to use the Epcon Communities Development System, Epcon Communities Works, and Marks. However, this sublicense is contingent upon the Sublicensee's compliance with the terms and conditions of both the Franchise Agreement and the Sublicense Agreement.
The obligation to pay Technology Royalty ceases for the franchisee when a sublicense agreement is in effect, as the sublicense granted to the Sublicensee is royalty-free. The term of this sublicense, and thus the cessation of the franchisee's Technology Royalty obligations related to the sublicensed project, lasts until the earliest of three conditions: the sale of the last unit of the Sublicensee's Epcon Communities project, one year after the completion of construction of the last unit, or the termination of the Franchise Agreement.