What is a 'buyer's premium' in the context of Caring Transitions' online 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 the winning bidder pays for items purchased through Caring Transitions' online auction website, CTBids.com. This fee is calculated as a percentage of the winning bid amount. The buyer's premium is intended to help cover the costs of providing, operating, and maintaining the CTBids.com platform, as well as the franchisee's expenses related to conducting the auction.
For example, if an item is won with a bid of $50 and the buyer's premium is set at 18%, the winning bidder will be charged an additional $9 (18% of $50) as a buyer's premium. The revenue from this premium is then split between Caring Transitions and the franchisee. During the franchisee's first two years, Caring Transitions receives 3% of the winning bid, while the franchisee retains the remaining balance of the buyer's premium. This percentage changes over time, with Caring Transitions receiving 4% in the third year, 5% in the fourth year, and 6% from the sixth through tenth years of operation, with the franchisee receiving the balance.
Caring Transitions retains the right to set both maximum and minimum buyer's premium amounts. As of the FDD date, the company intends 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, the portion of the buyer's premium they receive will not exceed 6% of the winning bid. The FDD notes that Caring Transitions did not derive any revenue from buyer's premiums in calendar year 2024. This revenue-sharing model allows Caring Transitions to support the CTBids.com platform while also incentivizing franchisees to actively participate in and manage their online auctions.