What is the condition that triggers the Exit Fee for C12 Group franchisees?
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 C12 Group's 2025 Franchise Disclosure Document, an Exit Fee is triggered if the franchisee terminates the agreement for reasons not attributable to C12 Group and then engages in a competitive business. Specifically, this competitive business must serve the same customers who were members of the franchisee's C12 Group franchise.
The Exit Fee is calculated as the average of the Royalty Fees paid to C12 Group over the three months preceding the termination notice, multiplied by twelve. This fee is designed to compensate C12 Group for the loss of business and potential competitive disadvantage caused by the franchisee's actions.
This condition is important for prospective franchisees to consider, as it restricts their ability to exit the franchise and immediately start a competing business without incurring a significant fee. Franchisees should carefully evaluate the potential implications of this clause before signing the franchise agreement, especially if they foresee a possibility of wanting to transition to a similar business in the future.