What constitutes a criminal conviction that would allow C12 Group to terminate the franchise agreement without an opportunity to cure?
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 the 2025 FDD, C12 Group can terminate the franchise agreement immediately, without allowing the franchisee an opportunity to correct the issue, if the franchisee or any member or owner of the franchisee receives a criminal conviction, enters a guilty plea, or enters a plea of nolo contendere. This applies specifically to any felony or crime of moral turpitude.
This provision means that a C12 Group franchisee's business can be shut down immediately if they, or any owner, is convicted of a felony or a crime considered morally reprehensible. This is a significant risk for potential franchisees, as it bypasses the standard 30-day cure period for other defaults. The FDD also states that if the franchisee is an entity, C12 Group can exercise its termination rights if any owner of the entity is involved in such a criminal matter.
The FDD specifies that these termination rights are subject to state and federal law, which may provide some additional protections or limitations. It is important for prospective franchisees to understand what constitutes a crime of moral turpitude in their jurisdiction, as this is not always clearly defined and can vary.
While immediate termination is a harsh penalty, it is not uncommon in franchising to have certain actions that trigger immediate termination due to the potential harm they can cause to the brand or the business relationship. Prospective franchisees should carefully consider the implications of this clause and seek legal advice if they have any concerns.