When does The C12 Group recognize initial territory fees as revenue?

According to C12 Group's 2025 Franchise Disclosure Document, the company recognizes initial territory fees as revenue when it has substantially completed all of the initial services it is obligated to provide under the franchise agreement. These services include assisting with site selection, training, providing reference and promotional materials, and helping with local C12 events.

For a prospective C12 Group franchisee, this means that C12 Group does not immediately recognize the initial franchise fee as revenue upon payment. Instead, they wait until they have fulfilled their obligations to assist the franchisee in setting up their business. This approach aligns the company's revenue recognition with the delivery of its services and support to new franchisees.

This policy could be seen as a benefit to franchisees because it suggests that C12 Group is invested in ensuring that franchisees receive the necessary support to get their business off the ground before recognizing the initial fee as revenue. However, the FDD states that initial fees are recognized as revenue when substantially all initial services are completed, but it does not define "substantially all." A prospective franchisee should seek clarification from C12 Group regarding what specific actions constitute the completion of "substantially all initial services" to fully understand when the company recognizes this revenue.