Who is considered a 'Covered Person' under the terms of the Caring Transitions agreement?

According to Caring Transitions's 2025 Franchise Disclosure Document, a 'Covered Person' includes any individual acting directly or indirectly for themselves or through, on behalf of, or in conjunction with another person. This definition specifically encompasses a spouse, child, parent, or sibling of a Covenantor.

This broad definition has significant implications for a prospective franchisee. It means that the non-compete and confidentiality obligations extend not only to the franchisee themselves but also to their immediate family members. This is a fairly standard practice in franchising, designed to prevent individuals closely related to the franchisee from circumventing the agreement by engaging in competitive activities.

For example, if a franchisee's spouse were to start a competing business, even if the franchisee is not directly involved, it could be considered a breach of the franchise agreement if the spouse is deemed a 'Covered Person'. Therefore, prospective franchisees need to ensure that their family members are aware of and understand these restrictions to avoid potential legal issues and financial penalties, such as the liquidated damages equal to 15% of the gross amount of all compensation received or earned by the Covenantor or any Covered Person as a result of the breach or noncompliance.