Does C12 Group have discretion in approving a third-party transferee of the franchise?
C12_Group Franchise · 2025 FDDAnswer from 2025 FDD Document
chise system and Franchisor and the desire for service continuity to C12 members within Franchisee's Territory, Franchisor and Franchisee agree as follows:
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- Franchisor shall have the right to approve all sales and transfers of the Franchised Business or any interest in Franchisee if Franchisee is an entity. A transfer shall be deemed to occur when more than fifty percent (50%) of the equity ownership of Franchisee, as of the date this Franchise Agreement, is sold or transferred to a third-party. Such a sale or transfer will result in Franchisee and/or the transferee, as applicable, executing Franchisor's then-current form of franchise agreement, which may contain terms materially different than the Franchise Agreement. Franchisor may condition its consent to any transfer based on the evaluation of successor or transferee qualifications, business plan viability (including recognition of Franchise purchase terms), the transferee's successful completion of New Chair Training and payment of a $6,000 transfer fee. In addition, if the transferee acquiring the entire Franchised Business is not an existing C12 franchisee, they must pay Franchisor a training fee.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 35–36)
What This Means (2025 FDD)
According to C12 Group's 2025 Franchise Disclosure Document, C12 Group retains the right to approve any sales and transfers of the franchised business or any interest in the franchisee if the franchisee is an entity. A transfer is considered to occur when more than 50% of the equity ownership is sold or transferred to a third party.
C12 Group may condition its approval of a transfer based on its evaluation of the successor's qualifications and the viability of their business plan, including recognition of franchise purchase terms. The transferee must also successfully complete New Chair Training and pay a $6,000 transfer fee. If the transferee is not an existing C12 Group franchisee, they must also pay a training fee to C12 Group.
The transfer is only deemed approved after C12 Group deems the transferee qualified, the $6,000 transfer fee is paid, all outstanding amounts owed by the franchisee are paid in full, the franchisee executes a general release of C12 Group, and a new franchise agreement is signed with the transferee if more than 50% of the franchised business is transferred. This level of control is typical in franchising, as franchisors want to ensure that any new owner is capable of maintaining brand standards and contributing positively to the franchise system.