What qualifications must a Principal have to operate a C12 Group franchise owned by an entity?
C12_Group Franchise · 2025 FDDAnswer from 2025 FDD Document
If the franchise is owned by an entity (e.g., a corporation, limited liability company, or partnership), then the franchise must be operated by someone who is an owner and officer of such an entity (a "Principal") and who has met all the on-going requirements of a fullytrained C12 Principal Chair (FA Sections X, XVIII). If circumstances should ever change such that such Principal is no longer both an owner and officer of such entity and such entity does not have a suitable replacement candidate for the role of C12 Principal Chair (contingent on C12's approval), then the franchise must be operated by the Principal Chair, or, failing that, transferred to C12 (at C12's option), an approved third-party (at C12's discretion), or terminated (FA Sections VIII, X).
C12 permits third party investors, silent equity positions, and non-operating ownership of a C12 franchise when all parties and agreements are reviewed and approved by C12. A non-operating ownership entity may designate a Principal Chair to operate the franchise and lead teams of Area Chairs as long as agreements and assignments are approved by C12 in writing. This includes the stipulation that C12 must approve and train all subsequent Area Chairs (whether designated as Principal Chairs by responsibility or not). The allowance is to both support capitalizing franchise launches as well as succession and liquidation of franchisees upon exit scenarios.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 35–36)
What This Means (2025 FDD)
According to C12 Group's 2025 Franchise Disclosure Document, if the franchise is owned by an entity, such as a corporation, limited liability company, or partnership, it must be operated by a 'Principal'. This Principal must be both an owner and an officer of the entity. Additionally, the Principal must meet all ongoing requirements of a fully trained C12 Principal Chair.
If the Principal no longer meets these requirements (i.e., is no longer both an owner and officer), and the entity does not have a suitable replacement candidate approved by C12 Group, the franchise operation must be managed by a Principal Chair. If that is not possible, the franchise may be transferred to C12 Group, an approved third party, or terminated, at C12 Group's discretion.
C12 Group also permits third-party investors, silent equity positions, and non-operating ownership of a C12 Group franchise, provided that all parties and agreements are reviewed and approved by C12 Group. A non-operating ownership entity can designate a Principal Chair to operate the franchise and lead teams of Area Chairs, subject to C12 Group's written approval of agreements and assignments. This includes C12 Group's approval and training of all subsequent Area Chairs, whether designated as Principal Chairs or not. This allowance supports both the capitalization of franchise launches and the succession and liquidation of franchisees upon exit scenarios.