How is the buyer's premium calculated for Caring Transitions auctions?
Caring_Transitions Franchise · 2025 FDDAnswer from 2025 FDD Document
chise Agreement § 6.1).
A "buyer's premium" is a fee paid by winning bidders for items won on our online auction website, www.CTBids.com. The buyer's premium defrays our costs in providing, operating, and maintaining CTBids.com and the franchisee's costs in conducting the auction, but there are no specific restrictions on its use. It is calculated as a percentage of the winning bid. For example, if an auction is won for $50 and the buyer's premium is 18%, the winning bidder will pay a buyer's premium of $9 (that is, 18% of $50). From the buyer's premium, (a) we will receive an amount equal to 3% of the winning bid ($1.50 in the above example) during a franchisee's first two years of operation and the franchisee will receive the balance of the buyer's premium ($7.50 in the above example); (b) we will receive 4% of the winning bid during the third year of operation and the franchisee will receive the balance; (c) we will receive 5% of the winning bid during the fourth year of operation and the franchisee will receive the balance; and (d) we will receive 6% of the winning bid during the sixth through tenth years of operation and the franchisee will receive the balance. Note: this is an example only and is not to be construed as a projection or estimate of actual or potential earnings, sales or receipts. We have the right, in our sole discretion, to establish a maximum and minimum buyer's premium. Presently we intend to set a maximum and recommended buyer's premium of 18%. We reserve the right to modify this policy after providing 30 days' notice but the amount of the buyer's premium that we receive will not exceed 6% of the winning bid. We did not derive any revenue from the buyer's premiu
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 22–29)
What This Means (2025 FDD)
According to Caring Transitions' 2025 Franchise Disclosure Document, a buyer's premium is a fee that winning bidders pay for items they win on the online auction website, CTBids.com. This premium helps cover the costs of operating and maintaining the CTBids platform, as well as the franchisee's expenses in conducting the auction. The buyer's premium is calculated as a percentage of the winning bid amount.
For example, if an auction item is won for $50 and the buyer's premium is set at 18%, the winning bidder will pay an additional $9 (18% of $50) as the buyer's premium. The franchisor and franchisee then split this premium. During the franchisee's first two years, Caring Transitions receives 3% of the winning bid, while the franchisee receives the remaining balance of the buyer's premium. In the third year, Caring Transitions' share increases to 4%, with the franchisee receiving the balance. By the fourth year, Caring Transitions receives 5%, and from the sixth through tenth years, their share is 6%, with the franchisee always receiving the remaining portion.
Caring Transitions has the right to set a maximum and minimum buyer's premium at their discretion. Currently, they intend to set a maximum and recommended buyer's premium of 18%. While Caring Transitions reserves the right to modify this policy with 30 days' notice, their share of the buyer's premium will not exceed 6% of the winning bid. The FDD clarifies that the example provided is for illustrative purposes only and should not be interpreted as a projection or estimate of actual or potential earnings, sales, or receipts. In 2024, Caring Transitions did not receive any revenue from buyer's premiums.