Who is responsible for debts incurred in the operation of a C12 Group Franchised Business?
C12_Group Franchise · 2025 FDDAnswer from 2025 FDD Document
- e.
For-Profit Business.
Franchisee shall operate the Franchised Business as a for-profit entity and shall not hold out to the public that the Franchised Business is a nonprofit venture of any kind.
Franchisee shall not file for nor obtain any tax-exempt status from the Internal Revenue Service.
- f.
Contractors.
Franchisee shall ensure that all subcontractors and subsidiaries of Franchisee operate in accordance with the standards set forth in this Agreement and engage in operations in compliance with the C12 System Standards as set forth in the Franchise Agreement and the Operations Manual and
Playbooks.
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
The 2025 Franchise Disclosure Document does not explicitly state who is responsible for the debts incurred in the operation of a C12 Group franchised business. While the document details the financial relationship between C12 Group and its franchisees, including initial fees, ongoing royalties, and revenue recognition, it does not specify which party is liable for debts arising from the franchisee's business operations.
Item 4 discusses the franchisee's duties, stating that the franchisee shall operate the franchised business as a for-profit entity. Additionally, the franchisee must ensure that all subcontractors and subsidiaries of Franchisee operate in accordance with the standards set forth in this Agreement. However, this section does not clarify debt responsibility.
A prospective C12 Group franchisee should seek clarification from the franchisor regarding liability for business debts. Understanding this aspect is crucial for assessing the financial risks and obligations associated with operating a C12 Group franchise. It would be prudent to consult with a legal and financial advisor to fully understand the implications of the franchise agreement and potential debt liabilities.