Does the C12 Group Franchise Agreement define 'material adverse impact'?

According to the 2025 C12 Group Franchise Disclosure Document, the term 'material adverse impact' is used within the context of franchisee obligations, but it is not specifically defined. The Franchise Agreement states that a franchisee cannot participate in any business viewed as competitive, injurious, or incompatible with C12 Group, and such activities must not have any material adverse impact on the franchisee's performance of their obligations under the agreement. This implies that any outside business activity that significantly hinders a franchisee's ability to fulfill their duties to C12 Group could be considered a breach of contract.

Since the term is not explicitly defined, it leaves room for interpretation. A prospective franchisee should carefully consider what activities might be seen as creating a 'material adverse impact' and how C12 Group might interpret this clause. It is important to note that the franchisor has the right to modify the approved products or services in its sole discretion from time to time, and the franchisee must comply with such modifications.

To gain clarity, a potential C12 Group franchisee should seek specific examples from the franchisor regarding what constitutes a 'material adverse impact'. Understanding the franchisor's perspective on this term is crucial for avoiding potential conflicts and ensuring compliance with the Franchise Agreement. It would be prudent to discuss hypothetical scenarios with the franchisor to determine what types of outside business interests or activities might be problematic.