Does the agreement specify any financial thresholds related to the operation of the Caring Transitions franchise by a limited liability entity?
Caring_Transitions Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 20: OUTLETS AND FRANCHISEE INFORMATION]
7.10 Limited Liability Business Entity.
(a) If Franchisee is a limited liability business entity (such as a corporation or limited liability company) when it signs this agreement, it must satisfy the following requirements at the time it signs this agreement:
(1) Franchisee must be a newly organized business entity that has never operated or engaged in any business.
(2) Franchisee's organizational and governing documents must (i) provide that its activities are confined exclusively to operating one or more Caring Transitions Franchises, (ii) prescribe a maximum of ten Principals, and (iii) prohibit the issuance or transfer of its ownership interests other than in compliance with the terms and conditions of this agreement.
(3) Franchisee shall provide Franchisor with a list of principal owners, certified by the Designated Individual, containing the full legal name, home address, home telephone number, and ownership percentage of each principal of Franchisee.
(4) Each principal of Franchisee must execute a separate agreement, in a form prescribed by Franchisor, unconditionally guaranteeing the full payment of Franchisee's obligations under this agreement and agreeing to be jointly and severally bound by all the provisions of this agreement, including the Covenants After Termination.
(5) Each ownership certificate of Franchisee must bear a legend stating that the issuance and transfer of any ownership interest in Franchisee are subject to the terms and conditions of this agreement.
If Franchisee is a limited liability company without certificates evidencing ownership, Franchisee shall provide Franchisor with acceptable evidence that its partnership or operating agreement or other organizational documents contain provisions acceptable to Franchisor prohibiting the transfer of any ownership interest in Franchisee other than in compliance with the terms and conditions of this agreement.
(6) Franchisee shall provide Franchisor with true and complete copies of its organizational and governing documents, including the resolutions of its Principals or governing body authorizing the execution of this agreement.
(7) The name of the Limited Liability Entity may not contain any of the words CARING TRANSITIONS, CARING, TRANSITIONS, or CT in any order, any variation thereof, or any of the other Marks. [Item 20: OUTLETS AND FRANCHISEE INFORMATION]
(7) The name of the Limited Liability Entity may not contain any of the words CARING TRANSITIONS, CARING, TRANSITIONS, or CT in any order, any variation thereof, or any of the other Marks.
(b) If Franchisee is not a limited liability business entity when it signs this agreement, then within 90 days after signing this agreement, Franchisee shall transfer all of its interest in the Franchised Business and all of its rights and obligations under this agreement to a limited liability business entity, comply with all of the requirements in subparagraph 7.10(a), and comply with the following additional requirements:
(1) The individual(s) who executed this agreement as Franchisee shall beneficially own a controlling interest in the limited liability business entity and shall not diminish his/her/their ownership Interest therein, except as may be required by law.
(2) One of the individuals who executed this agreement as Franchisee shall act as the principal executive (or manager) and operating officer of the limited liability business entity.
(3) Franchisee shall reimburse Franchisor for actual legal costs incurred by Franchisor in approving and effecting the transfer to the limited liability business entity.
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 41–49)
What This Means (2025 FDD)
According to Caring Transitions' 2025 Franchise Disclosure Document, the agreement does not specify any particular financial thresholds related to the operation of the franchise by a limited liability entity. However, if a franchisee is a limited liability business entity when signing the agreement, it must be a newly organized entity that has never operated any other business. The entity's governing documents must confine its activities exclusively to operating one or more Caring Transitions franchises, prescribe a maximum of ten Principals, and prohibit the issuance or transfer of its ownership interests except in compliance with the franchise agreement.
Each principal owner of the limited liability entity must execute a separate agreement guaranteeing the full payment of the franchisee's obligations. The ownership certificates must also bear a legend stating that the issuance and transfer of any ownership interest are subject to the terms of the agreement. The name of the limited liability entity cannot contain the words CARING TRANSITIONS, CARING, TRANSITIONS, or CT.
If the franchisee is not a limited liability entity when initially signing the agreement, they have 90 days to transfer all interests and obligations to such an entity. The individuals who signed the agreement as the franchisee must maintain a controlling interest in the limited liability entity, with one of them acting as the principal executive or manager. The franchisee will also need to reimburse Caring Transitions for legal costs incurred in approving the transfer. These stipulations ensure that the franchise adheres to Caring Transitions' standards and protects its interests, regardless of whether the franchisee operates as an individual or a limited liability entity.