Becoming an Epcon Franchise Builder is a serious commitment, and you will probably have questions prior to joining.
A meeting with an Epcon representative and review of our Franchise Disclosure Document (FDD) will answer most of your questions, but as a starting point, here are the answers to some questions we are frequently asked.
As part of the inquiry process, you will be provided a copy of our annual Franchise Disclosure Document (FDD). The FDD is a set of disclosures, referred to as Items 1-23. These disclosures, the contents of which are prescribed by the Federal Trade Commission (FTC) for all franchisors, describe many details about the Epcon Communities Franchise opportunity, such as the expected investment, the obligations of both parties, and the benefits of joining the system. The FDD is not a contract but, rather, is similar to a prospectus. Certain states also require additional disclosure language to be included along with the required FTC disclosures.
One section of the FDD includes samples of legal documents that may become a part of our agreement with you should you be awarded a franchise. The Franchise Agreement is one of those documents. It is important to note that the Franchise Agreement is a stand-alone document, and is the primary contract that will govern our relationship with you.
Please note that nothing substitutes for your careful review of the Epcon Communities Franchise Disclosure Document and we encourage you to carefully review the Franchise Disclosure Document with an advisor of your choice.
Whereas other builder franchise concepts charge royalty rates between four and five percent of gross revenue and often collect these amounts during construction, we charge point-of-closing royalty payments starting at just 2% of gross revenue and do not collect any of it until the house has been completed and transferred to the end buyer. Furthermore, the rate reduces quickly as your volume grows – all the way down to just 1% of gross revenue for all closings above an annual level of fifty. Full information on the point-of-closing royalty structure is discussed in Item 6 of the FDD, so please review the full details there.
Our FDD lays out two examples of estimated initial investments. Example 1 estimates between $1,115,200 to $1,464,200 if you are going to build a project of 30 homes by purchasing developed lots from a land developer. Example 2 estimates between $3,322,700 to $4,918,115 if you are going to build a project of 30 homes by purchasing raw land and self-developing the homesites. Please review the full details of these expected investment scenarios in Item 7 of the FDD.
Epcon Communities Franchising exists first and foremost to support our franchisees. Our team of franchising, real estate, and design professionals are here to help our franchisees through the real estate acquisition, site development, construction, and sales processes. Our affiliate homebuilding company has decades of experience in building the best of what is popular with today’s 55+ buyers, and we bring that level of expertise to your company from the moment you join us for your orientation. In addition to the support and collaboration you will receive from us, you will also have the opportunity to learn from your fellow franchise builders, who are always happy to share best practices and help you along the way.
Item 11 in the FDD details Epcon’s Assistance, Advertising, Computers Systems and Training provided to franchisees.
Yes, we have a lengthy list of preferred national account partners. Many of them participate in our annual national conference and vendor fair, offer preferred pricing to Epcon franchise builders, provide rebates on each house you build, and even provide additional discounts or free goods on model homes. You may find more details on these programs in Item 8 of the FDD.
When you sign your agreement with us, in some instances you will be given what we call an “Initial Market Area.” The geographic size of this area will vary based on a number of factors, but it will give you a certain period of exclusivity that will allow you to research, identify and procure an initial project location without competition from another Epcon builder. Once you have procured this site, you will sign a “Market Area Agreement,” which will define a final area of exclusivity that will continue for a certain period of time (provided you are not in default of your agreement with us). Detailed information on territory considerations such as this can be found in Item 12 of the FDD.
Epcon does not require the franchisee to participate personally in a full time capacity in the development and construction of an Epcon Communities business. Epcon does, however, recommend that an individual with an ownership interest in the company directly participate in the day-to-day operations, and our franchise agreement gives us the ability to require a full-time Director of Operations to manage the franchise business when we feel it is necessary. Please refer to Item 15 of the FDD for more detailed information on your participation obligations.
So long as what you are building today is not competitive with the types of homes and communities we build, you are generally not restricted in the types of goods and services that you choose to offer outside of your Epcon Communities project. In fact, prior to joining our system, many of our current franchise builders were either custom or production builders themselves, and some of them have chosen to continue those legacy businesses alongside their Epcon franchise projects. Please refer to Item 16 of the FDD for full details on the restrictions we place on what our franchisees may sell.
Yes, because we feel it is important for our prospective franchise builders to have a full picture of the opportunity, we provide historical information on sales prices, options prices, lot premiums, and sales pace for both corporate-owned and franchise-owned projects completed during the last year. Please refer to Item 19 of the FDD for our financial performance representations.