Is the C12 Group franchisee's payment of royalty fees based on actual collections from members?

According to C12 Group's 2025 Franchise Disclosure Document, a franchisee's royalty fees are not based on actual collections from members. Instead, C12 Group franchisees must pay royalty fees based on their membership roster and billings, regardless of whether they have actually collected the registration or membership fees from their members. This means that even if a member does not pay, the franchisee is still obligated to pay C12 Group the corresponding royalty fees.

This policy places the responsibility of collecting fees squarely on the franchisee. The franchisee is in charge of invoicing members, setting collection policies, and ensuring timely payments. While franchisees have the autonomy to set their own registration and monthly member fees based on local economic conditions, they must still remit royalty fees to C12 Group based on the billed amounts, irrespective of actual collections.

This arrangement carries financial implications for prospective franchisees. They need to implement effective collection strategies and be prepared to cover royalty fees even when members are delinquent in their payments. This could impact the franchisee's cash flow and profitability, especially in the early stages of the business when building a stable membership base is crucial. Therefore, a clear understanding of local economic factors and a well-thought-out collection policy are essential for managing this aspect of the C12 Group franchise.