What happens if the C12 Group franchisee does not pay the Member Registration Fees?

According to C12 Group's 2025 Franchise Disclosure Document, the franchisee is responsible for invoicing and collecting registration fees from their members. However, the franchisee must still pay C12 Group royalty fees based on their membership roster and billings, regardless of whether the franchisee actually collects the registration and/or membership fees from its members. This means that the franchisee's obligation to pay royalties to C12 Group is not contingent on the franchisee's success in collecting fees from their own members.

Furthermore, the FDD states that C12 Group must receive both the registration form and payment before a New Member Kit or binder will be sent to the franchisee for distribution to the new member. Therefore, if a franchisee fails to pay the member registration fees, C12 Group will withhold the New Member Kit. This could hinder the franchisee's ability to properly onboard new members and deliver the full value of the C12 Group membership.

Additionally, the franchisee must adhere to C12 Group's standard processes and payment due dates. Franchisees are required to submit a monthly Area Chair Activity and Payment Report to C12 Group by the fifth business day of each month. If this report is late, the franchisee will incur a late fee of $100. Any unpaid royalty fees past due greater than thirty days will be subject to a monthly compounded interest rate of 1.5%, or the maximum interest rate allowed by law. These late fees and interest are to be paid in conjunction with the franchisee's payment of royalty fees.

In summary, while the franchisee bears the responsibility of collecting registration fees from members, they remain obligated to pay royalty fees to C12 Group regardless of their collection success. Failure to pay member registration fees will result in C12 Group withholding the New Member Kit and may lead to late fees and interest charges on unpaid royalty fees.