Is the post-termination non-competition agreement for C12 Group franchisees applicable if the franchisee pays the Exit Fee?

According to C12 Group's 2025 Franchise Disclosure Document, the post-termination non-competition obligations do not apply if the franchisee pays the Exit Fee. The non-compete agreement states that for two years after the termination of the agreement, a franchisee cannot own an interest in, be employed by, or be engaged with a competitive business within their territory, within ten miles of their territory, within the territory of any other C12 Group franchise, or within ten miles of any other C12 Group franchise's territory. A competitive business is defined as one that offers peer mentorship and coaching to Christian business leaders.

This means that if a C12 Group franchisee terminates their agreement and wishes to immediately engage in a similar business, they can do so without being restricted by the non-compete clause, provided they pay the Exit Fee. The Exit Fee is calculated based on the average Royalty Fees paid to C12 Group over the three months preceding the franchisee's notice of termination, multiplied by twelve.

For a prospective franchisee, this provides an option to exit the franchise agreement and immediately pursue competitive opportunities, albeit at a financial cost. This flexibility could be valuable for franchisees who wish to change their business direction or explore other ventures in the same industry without a mandatory waiting period. It is important to note that the Exit Fee is based on past royalty payments, so franchisees should consider this potential cost when evaluating their options for terminating the agreement and engaging in a competitive business.