Under what conditions is the Liquidated Damages Fee charged to an Epcon Communities franchisee?
Epcon_Communities Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Liquidated Damages For Breach of Franchise Agreement | The greater of (i) the estimated value of the project multiplied by 3.0%, or (ii) the actual completion value of the project multiplied by 3.0%. | Immediately upon occurrence of the breach. | Amounts are payable to us. This amount is chargeable for each project developed in breach of Articles 10.3 and 14.3 of the Franchise Agreement. |
Source: Item 6 — OTHER FEES (FDD pages 16–22)
What This Means (2025 FDD)
According to Epcon Communities' 2025 Franchise Disclosure Document, a Liquidated Damages Fee is charged to a franchisee for each project developed in breach of Articles 10.3 and 14.3 of the Franchise Agreement. The fee is the greater of (i) the estimated value of the project multiplied by 3.0%, or (ii) the actual completion value of the project multiplied by 3.0%.
This fee is payable immediately upon the occurrence of the breach. It is important for prospective franchisees to carefully review Articles 10.3 and 14.3 of the Franchise Agreement to fully understand the specific obligations and actions that could trigger this substantial liquidated damages fee.
Liquidated damages provisions are common in franchising to compensate the franchisor for losses resulting from a franchisee's non-compliance with the franchise agreement. Given that the Liquidated Damages Fee is calculated as a percentage of the project's estimated or actual completion value, this could represent a significant financial penalty for an Epcon Communities franchisee. Franchisees should ensure they understand and can comply with all terms of the Franchise Agreement to avoid such penalties.