What is the condition regarding competitive business activity that triggers the C12 Group Exit Fee?
C12_Group Franchise · 2025 FDDAnswer from 2025 FDD Document
| then you do not pay or otherwise reimburse C12 for its cost of sending a representative. | |||
|---|---|---|---|
| Member Registration | Currently: CEO - $550 Key Players - $330 | Upon sign-up | Enrolls member and provides start-up kit. See Item 12 of this FDD for definitions of CEO and Key Player membership. This is amount due to C12, franchisee may charge more to the new member. |
| Transfer Fee | $6,000 | On date of transfer | Transfers of franchises are subject to C12's prior approval. |
| Exit Fee | The average Royalty Fees paid to us over the three (3) months preceding your notice of termination multiplied by twelve (12) | Upon termination by the franchisee, if applicable. | If Franchisee terminates this Agreement due to no fault of Franchisor and Franchisee engages in or intends to engage in a competitive business serving the same customers who were otherwise engaged as members in Franchisee's C12 Franchised Business, Franchisee shall pay Franchisor an exit fee equal to (a) the average Royalty Fees paid to Franchisor over the three (3) months preceding Franchisee's notice of termination (b) multiplied by twelve (12) ("Exit Fee"). |
Source: Item 6 — OTHER FEES (FDD pages 12–17)
What This Means (2025 FDD)
According to the 2025 C12 Group Franchise Disclosure Document, an Exit Fee is triggered if a franchisee terminates the agreement for reasons not attributable to C12 Group and then engages in a competitive business. Specifically, this applies if the franchisee starts a business that serves the same type of customers who were members of the franchisee's C12 Group franchise.
The Exit Fee is calculated by averaging the Royalty Fees paid to C12 Group over the three months preceding the termination notice and multiplying that average by twelve. This fee is designed to compensate C12 Group for the loss of business and potential competitive harm caused by the former franchisee's new venture.
This condition is important for prospective franchisees to consider, as it restricts their ability to operate a similar business after leaving the C12 Group system, especially if the termination is voluntary. Franchisees should carefully evaluate this clause and its implications for their future business plans. It is advisable to seek legal counsel to fully understand the scope and enforceability of this Exit Fee provision.