How are C12 Group royalty fees calculated?
C12_Group Franchise · 2025 FDDAnswer from 2025 FDD Document
Revenue Recognition: A majority of the Company's revenues are derived from franchise fees. Franchise agreements generally require the franchisee to pay 1) an initial non-refundable territory fee of $25,000 per franchise unit, 2) a prepaid marketing deposit of $10,000, 3) a training and support fee of $10,000 to $12,500, which is refundable prior to the start of training, 4) continuing fees based upon a percentage of monthly member billings ranging from 12% to 30%, and 5) a new member registration fee ranging from $300-500. Franchise agreements are renewed annually with no additional charges.
Franchisee will pay Franchisor Royalty Fees based on Franchisee's membership roster and billings regardless of whether Franchisee actually collects the registration and/or membership fees from its members.
Franchisor shall notify Franchisee of material changes to Royalty Fees and minimum membership fees (as the basis for calculating Royalty Fees) at least twelve (12) months before the expiration of the Term or any Renewal Term.
Franchisee shall pay Franchisor a late fee of $100 each time this report is late.
Any unpaid Royalty Fees past-due greater than thirty (30) days will be subject to a monthly compounded interest rate of 1.5% or the maximum interest rate allowed by law.
In addition, if Franchisee requires a change to a monthly Area Chair Activity and Payment Report (not due to Franchisor's system error) after the fifth (5th) day of the following month, Franchisee must pay Franchisor a $99 fee to correct such error(s).
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to C12 Group's 2025 Franchise Disclosure Document, the franchisee pays royalty fees based on a percentage of monthly member billings. These continuing fees range from 12% to 30% of monthly member billings. The franchisee's monthly royalty fee is based solely on each month's membership roster and billings.
It is important to note that the franchisee is responsible for invoicing and collecting registration and membership fees from their members, as well as setting collections policies and standards. However, the royalty fees owed to C12 Group are calculated based on the membership roster and billings, regardless of whether the franchisee actually collects those fees from its members.
Franchisor shall notify Franchisee of material changes to Royalty Fees and minimum membership fees (as the basis for calculating Royalty Fees) at least twelve (12) months before the expiration of the Term or any Renewal Term.
Furthermore, C12 Group also charges a late fee of $100 each time the Area Chair Activity and Payment Report is submitted late. Any unpaid royalty fees past due greater than thirty (30) days will be subject to a monthly compounded interest rate of 1.5% or the maximum interest rate allowed by law. If the franchisee requires a change to a monthly Area Chair Activity and Payment Report (not due to C12 Group's system error) after the fifth (5th) day of the following month, the franchisee must pay C12 Group a $99 fee to correct such error(s).