What constitutes 'Gross Billings' for C12 Group franchisees when calculating royalty fees?
C12_Group Franchise · 2025 FDDAnswer from 2025 FDD Document
ontinuing through the Term of this Agreement and any renewals thereof, Franchisee shall pay Franchisor the following continuing fees:
- a. Royalty Fees. Franchisee shall pay Franchisor a monthly Royalty Fee equal to a percentage of monthly Gross Billings (including CEO Forums and Key Players Forums) based on a sliding scale as defined below, with payment to be received by Franchisor no later than the fifth (5th) day of the following month based on each month's total membership billings, even if some billings are not actually collected. "Gross Billings" means the actual total amount that Franchisee charges on a monthly basis for its collective CEO Members' and Key Player Members' membership fees subject to the minimum individual membership fees of $1,000 for CEO Members and $475 for Key Player Members. If Franchisee charges its members less than these minimum membership fees, then Franchisee's Gross Billings shall be calculated based on these minimum membership fees multiplied by the respective number of CEO Members and Key Players Members on Franchisee's roster each month. If Franchisee charges more than these minimum membership fees, then Gross Billings shall be based on the higher fees that Franchisee actually charges for
its memberships multiplied by the respective number of CEO Members and Key Players Members on Franchisee's roster.
Franchisor may increase minimum individual membership fees over time
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to C12 Group's 2025 Franchise Disclosure Document, "Gross Billings" are defined as the total amount a franchisee charges monthly for membership fees from both CEO Members and Key Player Members. These gross billings are subject to minimum individual membership fees of $1,000 for CEO Members and $475 for Key Player Members. However, the FDD states that the minimum membership fees for 2025 will be $1,100 per CEO and $500 per Key Player.
For C12 Group franchisees, royalty fees are calculated on these gross billings, regardless of whether the franchisee has actually collected the membership fees from its members. If a franchisee charges less than the minimum membership fees, the gross billings will be calculated based on the minimum fees multiplied by the number of CEO and Key Player Members. Conversely, if a franchisee charges more than the minimum, the higher actual fees charged are used to calculate gross billings.
This definition of Gross Billings is important for prospective franchisees as it directly impacts the royalty fees they will owe to C12 Group. Franchisees need to be aware of the minimum membership fee requirements and factor them into their pricing strategies. The fact that royalty fees are based on billings, not collections, means franchisees must manage their invoicing and collections effectively to avoid paying royalties on uncollected revenue. Also, C12 Group has the right to increase the minimum individual membership fees over time, which will affect the franchisee's gross billings and royalty payments.