June 9, 2012
C12 Group franchise owners preach that business owners must hold themselves accountable for their decisions and their actions.
The C12 Group franchise website states “how we conduct business defines much of who we are.”
So if Christian businesses have the C12 Group to urge accountability upon them, who holds the C12 Group accountable?
Well, the State of Maryland, for one.
Are you familiar with the C12 Group franchise opportunity? Please share a comment below.
C12 Group Violated Franchise Laws
C12 offers and sells franchises for executive development programs directed to and for Christian business owners and their staff.
The State of Maryland has charged C12 Group with selling franchises illegally, with violating Maryland Franchise Law and multiple Maryland Franchise Regulations (COMAR) and for disobeying the Maryland Commissioner’s 2009 Escrow Order.
The Maryland Attorney General has issued a consent order demanding that C12 Group cease violations of Maryland franchise law and offer a full offer to rescind the franchise agreement to the franchisee who was sold the illegal, unregistered franchise.
Read the consent order against C12 Group and CEO Donald Barefoot here:
C12 Group: Innocent Error or Serious Red Flags?
While some franchisors try to pass off lapsed registrations as innocent administrative errors (The Sin of Sloth), there are several red flags contained in this consent order.
The Sin of Pride?
The first is what appears to be C12 Groups flagrant disregard for franchise laws and disrespect for the agency charged with protecting Maryland consumers. When C12 Group had submitted an earlier franchise renewal to Maryland, the Maryland Securities Division responded with a letter “outlining deficiencies that C12 had to correct in order to renew its franchise offering in Maryland.”
C12 Group did not respond nor did they correct these deficiencies and apparently proceeded with marketing and selling franchises in Maryland without the legal right to do so.
The Sin of Greed?
In connection with that renewal application, on January 21, 2009 the Commissioner signed an Escrow Order (“2009 Escrow Order”) requiring “C12 to deposit all initial fees, within 48 hours of the receipt of these funds, in an escrow account approved by the Commissioner until such time as the Commissioner takes further action.”
C12 Group was obviously aware of this Escrow Order as it appeared in the unregistered Franchise Disclosure Document it used to sell its franchise in Maryland. However, C12 collected total initial franchise fees of $25,000.00 via checks and credit card. C12 admits that it did not deposit the fees into the Maryland escrow account as required by the 2009 Escrow Order.
The Sin of Deceit?
One of the most troubling questions of C12’s transgressions is whether C12 is using deceptive or illegal earnings claims (now called Financial Performance Representations) to sell franchises. The unregistered and unapproved FDD C12 used to sell its Maryland franchise did not comply with the requirements of Maryland Franchise Law. According to the Consent Order, “the Financial Performance Representation, in the form of a projection, that C12 included in each FDD did not have a reasonable basis and did not otherwise comply with the requirements under the Maryland Franchise Law for making a Financial Performance Representation.”
When we checked the MN database of FDDs, C12’s franchise registration application has been withdrawn. Could it be that C12 did not register its FDD with Maryland because it knew it was using deceptive or defective earnings projections to close franchise sales?
We Invite C12 Franchisees, Executives, Employees & Clients to Share Below.
Is C12 Group a respectable, Christian franchise organization that simply made an honest mistake?
Or is C12 Group a company simply interested in selling franchises and collecting fees, and is willing to use deceptive earnings projections and flout franchise laws to do so?
UnhappyFranchisee.com is a franchise discussion site that invites franchisees, executives, employees and their clients to share their insights, experiences and views using their own names or anonymously.
Our goal is to help prospective franchise owners and others make informed franchise decisions.
ARE YOU FAMILIAR WITH THE C12 GROUP FRANCHISE OPPORTUNITY? OR C12 CHRISTIAN BUSINESS SERVICES? SHARE A COMMENT BELOW.