What actions related to bankruptcy would allow C12 Group to terminate the franchise agreement immediately?
C12_Group Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisor may terminate this Agreement immediately, upon written notice to Franchisee, should any of the following occur: (i) Franchisee or any member or owner of Franchisee receiving a criminal conviction, entering a guilty plea, or entering a plea of nolo contendere with respect to any felony or crime of moral turpitude; (ii) the abandonment of the Franchised Business or sustained inability of Franchisee to productively engage in the Franchised Business; (iii) an unapproved transfer of Franchise responsibility or any ownership interest(s) in Franchisee if Franchisee is an entity; (iv) Franchisee's filing of bankruptcy or making of an assignment for the benefit of creditors; and/or (v) unrepentant behavior by Franchisee or any member or owner of Franchisee that strikes at the unity of those engaged in C12 as Area Chairs and members.
In the event that the franchisee is an entity, Franchisor may also exercise its termination rights pursuant to this section in the event that any of the foregoing shall occur with respect to any owner of such entity.
The provisions under this Section are subject to state and federal law.
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to C12 Group's 2025 Franchise Disclosure Document, C12 Group can terminate the franchise agreement immediately if the franchisee files for bankruptcy or makes an assignment for the benefit of creditors. This action can be taken by C12 Group with written notice to the franchisee. If the franchisee is an entity, C12 Group can exercise its termination rights if any owner of the entity takes either of these actions.
This clause protects C12 Group from the financial instability and potential legal complications associated with a franchisee's bankruptcy. Bankruptcy or assignment for the benefit of creditors indicates severe financial distress, which could negatively impact the operation and reputation of the C12 Group franchise. Immediate termination allows C12 Group to sever ties quickly and mitigate potential damage.
It is important to note that these termination rights are subject to state and federal law, which may provide additional protections or limitations for the franchisee. A prospective franchisee should consult with a legal professional to understand the full implications of this clause and how it may be affected by applicable laws in their jurisdiction.