What is required for a non-operating ownership entity to designate a Principal Chair for a C12 Group franchise?
C12_Group Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
A non-operating ownership entity must comply with the moral and spiritual integrity standards associated with a Principal Chair within the community and not engage in any competing, conflict of interest, or predatory business interests. Any non-operating ownership entity must still coordinate with and submit to C12 Group's ultimate approval of the selection, training, and installment of any Principal Chair for the franchise.
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 the 2025 C12 Group Franchise Disclosure Document, a non-operating ownership entity can designate a Principal Chair to operate the franchise and lead teams of Area Chairs, provided certain conditions are met. C12 Group must review and approve all agreements and assignments in writing. This includes the stipulation that C12 Group must approve and train all subsequent Area Chairs, whether designated as Principal Chairs or not. This allowance is designed to support the capitalization of franchise launches, as well as the succession and liquidation of franchisees upon exit scenarios.
Furthermore, the non-operating ownership entity must adhere to the moral and spiritual integrity standards expected of a Principal Chair within the community. They must not engage in any business interests that compete with, conflict with, or are predatory towards C12 Group. The non-operating ownership entity must coordinate with and ultimately submit to C12 Group's approval regarding the selection, training, and installment of any Principal Chair for the franchise.
In essence, while C12 Group permits non-operating ownership, it retains significant control over who operates the franchise and ensures that the designated Principal Chair meets its standards and training requirements. This protects the brand's integrity and operational consistency. Prospective franchisees should carefully consider these requirements and ensure they can meet them before entering into a franchise agreement with C12 Group.