factual

Under the Lender Assignment Agreement for Epcon Communities, what agreements are included in the assignment?

Epcon_Communities Franchise · 2025 FDD

Answer from 2025 FDD Document

NOW, THEREFORE, in consideration of the foregoing, of the agreements, terms and conditions herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Assignor and Assignee do hereby agree as follows:

    1. Assignment of Franchise Agreement and Market Area Agreement. Assignor hereby expressly grants, bargains, sells, conveys, transfers and assigns to Assignee such of Assignor's right, title and interest in and to the Franchise Agreement and the Market Area Agreement (copies of which are attached hereto, made a part hereof and marked as Exhibit "A"), and the license granted thereunder, which may be necessary to permit Assignee to complete any Project which is the subject thereof upon the default or occurrence of an event of default by Assignor under any of the Loan Agreements (hereinafter, the "Assignment"). The Assignment shall not include the rights of the franchisee provided under Sections 3.4 of the Franchise Agreement.
    1. Acceptance of Assignment and Assumption of the Obligations. 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.
    1. Assignor's Continuing Liability for the Obligations. Notwithstanding the Assignment, Assignor hereby acknowledges and agrees that it shall remain liable to Epcon Communities for all of the Obligations.

Source: Item 23 — RECEIPTS (FDD pages 86–280)

What This Means (2025 FDD)

According to the 2025 Epcon Communities Franchise Disclosure Document, the Lender Assignment Agreement includes the Franchise Agreement and the Market Area Agreement. Specifically, the assignment grants the lender the rights and interests in these agreements necessary to complete any project if the franchisee defaults on their loan agreements. However, the assignment does not include the rights of the franchisee provided under Section 3.4 of the Franchise Agreement.

If the lender decides to use the Epcon Communities Development System to complete unfinished projects, they must adhere to the franchisee's obligations under both the Franchise Agreement and the Market Area Agreement. The lender must also communicate their decision in writing to Epcon Communities regarding the assumption of these obligations. If the lender completes projects in full compliance with the agreements, they are not obligated to inscribe their stock certificates with a legend referencing the Franchise Assignment Agreement, Lender Agreement, or Market Area Agreement.

Despite the assignment, the franchisee remains liable to Epcon Communities for all obligations under the agreements. Epcon Communities' duties and obligations remain unchanged, and all payments specified in the Franchise Agreement must be paid on time. The consent to the assignment is conditional upon both the franchisee and the lender fulfilling specific conditions, ensuring the integrity and continuation of the franchise agreement.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.