What did The C12 Group agree to regarding the offer and sale of franchises in Maryland?
C12_Group Franchise · 2025 FDDAnswer from 2025 FDD Document
In the Matter of The C12 Group, LLC, Administrative Proceeding Before the Securities Commissioner of Maryland, Case No. 2011-0530. In responding to inquiries from the Maryland Securities Division as a result of an investigation into the franchise related activities of The C12 Group, LLC ("C12"), the Maryland Securities Commissioner ("Commissioner") concluded that grounds exist to allege that C12 violated the registration, disclosure and antifraud provisions of the Maryland Franchise Law and an Escrow Order of the Commissioner, in relation to the offer and sale of a C12 franchise. C12 disclosed that it sold a franchise in Maryland during a time it was not registered to offer and sell franchises in Maryland and that it did not deposit any initial fees paid by the franchisee into escrow account as required pursuant to a 2009 Escrow Order of the Commissioner. On May 15, 2012, the Commissioner and C12 agreed to enter into a consent order whereby C12, without admitting or denying any violations of law, agreed to: immediately and permanently cease from the offer and sale of franchises in violation of the Maryland Franchise Law; promptly file and diligently pursue an application for franchise registration in Maryland; and offer rescission to the franchisee who was sold a franchise in Maryland in violation of the Maryland Franchise Law.
Source: Item 3 — LITIGATION (FDD page 11)
What This Means (2025 FDD)
According to the 2025 FDD, The C12 Group faced an administrative proceeding before the Securities Commissioner of Maryland, Case No. 2011-0530, due to alleged violations of Maryland Franchise Law. The allegations stemmed from selling a franchise in Maryland without proper registration and failing to deposit initial fees into an escrow account as mandated by a 2009 Escrow Order.
To resolve the matter, on May 15, 2012, The C12 Group and the Commissioner entered into a consent order. Without admitting or denying any legal violations, The C12 Group agreed to several key actions. First, they committed to immediately and permanently ceasing any further offers or sales of franchises that violated Maryland Franchise Law. Second, The C12 Group agreed to promptly file and diligently pursue an application for franchise registration in Maryland. Finally, they agreed to offer rescission to the franchisee who had been sold a franchise in Maryland in violation of the Maryland Franchise Law.
This agreement indicates that The C12 Group had to take corrective actions to comply with Maryland's franchise regulations. For a prospective franchisee, this highlights the importance of ensuring that a franchisor is fully compliant with all applicable state laws before investing in a franchise. It also demonstrates the potential consequences a franchisor may face for non-compliance, including legal proceedings and the need to offer rescission to affected franchisees.