Under what circumstances would pending litigation, other than routine, be considered significant by C12 Group?

According to the 2025 FDD, C12 Group considers pending actions, other than routine litigation incidental to the business, to be significant if they are viewed in the context of the number of franchisees and the size, nature, or financial condition of the franchise system or its business operations. This means that even if litigation is not considered routine, its importance is judged by how it impacts the broader C12 Group franchise network.

For a prospective franchisee, this is important because it indicates that C12 Group assesses the materiality of legal issues based on their potential to affect the entire system. Litigation that might seem minor in isolation could be deemed significant if it has the potential to set a precedent, create financial strain, or otherwise disrupt the operations of multiple franchises. This could include lawsuits involving intellectual property, contractual disputes, or regulatory compliance.

This approach is fairly standard in franchising, where the success of individual franchisees is closely tied to the overall health and reputation of the brand. Franchise systems must carefully manage legal risks to protect the interests of all franchisees. Therefore, prospective franchisees should inquire about any pending litigation and carefully evaluate its potential impact on their investment and the C12 Group system as a whole. Understanding how C12 Group assesses the significance of litigation can help potential franchisees make informed decisions about joining the franchise system.