How long is the 'Step-In Payment' period for a C12 Group franchisee after termination?
C12_Group Franchise · 2025 FDDAnswer from 2025 FDD Document
If this Agreement is terminated by Franchisor for cause, Franchisor may, in its sole discretion, choose to continue to operate the Franchised Business with a Chair or other representative designated by Franchisor, which may involve another C12 franchisee.
In the event that Franchisor assumes the operation of the Franchised Business as described herein, Franchisor shall pay Franchisee fifty percent (50%) of the Net Operating Income of the Franchised Business for three (3) months (the "Step-In Payment").
The "Net Operating Income" means the Gross Revenue of the Franchised Business less (i) payment of the Royalty Fees to Franchisor that Franchisee would have paid but for the termination of this Agreement and (ii) all other expenses incurred by Franchisor while operating the Franchised Business.
Franchisor may, in its sole discretion, attempt to sell the Franchised Business, but Franchisor shall have no obligation to do so.
If Franchisor does not sell or otherwise decides to close the Franchised Business, there will be no compensation to Franchisee.
If Franchisor sells the Franchised Business within three (3) months of termination of this Agreement, Franchisor will pay Franchisee the amount that Franchisor receives for the Franchised Business less the Step-In Payment that Franchisor has already paid to Franchisee.
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to the 2025 C12 Group Franchise Disclosure Document, if the franchise agreement is terminated by C12 Group for cause, C12 Group has the option to operate the franchised business using a Chair or another representative, potentially another C12 Group franchisee. If C12 Group chooses to do so, the franchisee will receive a 'Step-In Payment.'
The 'Step-In Payment' is defined as fifty percent (50%) of the Net Operating Income of the franchised business. This payment will be made for three (3) months following the termination. The Net Operating Income is calculated by subtracting the royalty fees that the franchisee would have paid, along with any other expenses incurred by C12 Group while operating the business, from the Gross Revenue of the franchised business.
It's important to note that C12 Group is not obligated to sell the franchised business. If C12 Group decides to close the business instead of selling it, the franchisee will not receive any compensation. If C12 Group sells the business within three months of the termination, the franchisee will receive the amount C12 Group receives for the business, minus any Step-In Payments already made.