What is the C12 Group franchisee responsible for regarding collections policies and standards?
C12_Group Franchise · 2025 FDDAnswer from 2025 FDD Document
While Franchisee's monthly Royalty Fee is established solely based on each month's membership roster and billings, Franchisee is solely responsible for invoicing and collecting registration fees and membership fees from Franchisee's members and setting collections policies and standards.
Franchisee will pay Franchisor Royalty Fees based on Franchisee's membership roster and billings regardless of whether Franchisee actually collects the registration and/or membership fees from its members.
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to the 2025 C12 Group Franchise Disclosure Document, the franchisee is responsible for invoicing and collecting registration and membership fees from their members. The C12 Group franchisee is also responsible for setting the collections policies and standards for these fees.
This means that while C12 Group establishes the monthly royalty fee based on the franchisee's membership roster and billings, the franchisee bears the responsibility of ensuring these fees are collected from their members. The franchisee's royalty payments to C12 Group are not contingent on whether the franchisee successfully collects membership fees.
This arrangement places the credit risk and collection burden on the franchisee. A prospective franchisee should carefully consider the local economic conditions and the creditworthiness of potential members when setting membership fees and collection policies. They should also have a plan for managing delinquent accounts to ensure they can meet their royalty obligations to C12 Group, regardless of collection success.