Under what condition does Epcon Communities use the Sublicense Agreement?
Epcon_Communities Franchise · 2025 FDDAnswer from 2025 FDD Document
We acknowledge that real estate developers often form a separate business entity for each of their projects to isolate each of their business endeavors. On the condition that the individual ownership of the entities remains the same or substantially similar, and as an accommodation to you to simplify the paperwork involved with forming a separate business entity for each project, we use the Sublicense Agreement (see Exhibit H to this disclosure document) as a legal mechanism to evidence the contractual relationship between your initial business entity, your new business entity, and us. Also, when the Sublicense Agreement is signed, your new business entity does not pay an initial franchise fee to us (or any other consideration) for the grant of the rights to your new entity to develop your project. We do not grant to you the right to sell or negotiate the sale of franchises in our name or receive any consideration from your new entity with respect to the grant of these rights. The nature of the sublicense arrangement is described in Section 12.5 of the Franchise Agreement.
Source: Item 12 — TERRITORY (FDD pages 48–50)
What This Means (2025 FDD)
According to Epcon Communities' 2025 Franchise Disclosure Document, the Sublicense Agreement is used when a franchisee forms a separate business entity for each of their real estate development projects. Epcon Communities acknowledges that real estate developers often create distinct entities for each project to isolate business endeavors. To simplify paperwork, Epcon Communities uses the Sublicense Agreement as a legal mechanism to evidence the contractual relationship between the franchisee's initial business entity, the new business entity, and Epcon Communities itself. This is conditional on the individual ownership of the entities remaining the same or substantially similar.
When a Sublicense Agreement is used, the new business entity does not pay an initial franchise fee or any other consideration to Epcon Communities for the rights to develop the new project. However, the franchisee is not granted the right to sell or negotiate the sale of franchises in Epcon Communities' name, nor can they receive any consideration from their new entity for granting these rights. The nature of this sublicense arrangement is further detailed in Section 12.5 of the Franchise Agreement.
In essence, the Sublicense Agreement provides a streamlined process for franchisees who routinely establish new legal entities for each development project, eliminating the need to pay additional franchise fees for each new entity, provided the ownership structure remains consistent. This arrangement benefits both the franchisee, by reducing administrative and financial burdens, and Epcon Communities, by maintaining a consistent and clear contractual relationship across multiple projects under the same ownership.