What did The C12 Group disclose regarding the deposit of initial franchise fees into an escrow account?
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, C12 Group disclosed an administrative proceeding with the Maryland Securities Commissioner. The Commissioner concluded that C12 Group violated the registration, disclosure, and antifraud provisions of the Maryland Franchise Law, as well as an Escrow Order. This was due to C12 Group selling a franchise in Maryland without being registered in the state and not depositing the initial fees into an escrow account as mandated by a 2009 Escrow Order.
To resolve the matter, C12 Group and the Commissioner entered into a consent order on May 15, 2012. C12 Group agreed to immediately and permanently cease offering or selling franchises in Maryland in violation of the Maryland Franchise Law. They also agreed to promptly file 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.
This disclosure indicates a past regulatory issue for C12 Group. While the matter was resolved through a consent order, prospective franchisees should be aware of this history. It is important to note that this disclosure relates specifically to Maryland and does not necessarily reflect C12 Group's practices in other states. A prospective franchisee may want to inquire about C12 Group's current franchise registration and escrow practices, particularly in their state, to ensure compliance with local regulations.