Does Caring Transitions contract with a related party to lease employees?
Caring_Transitions Franchise · 2025 FDDAnswer from 2025 FDD Document
4. RELATED PARTY TRANSACTIONS:
The Company leases office facilities from a related party under an agreement as disclosed in Note 3
The Company shares its phone service, utilities, office supplies, and copier with other related parties that are owned by its shareholder. Each month the company that pays an expense will bill the other entities for its portions. The reimbursements for such costs have been recorded in the specific expense categories. In addition, the Company contracts with a related party for its leased employees.
C. T. Franchising Systems, Inc. Notes to the Financial Statements December 31, 2024, 2023 and 2022
During 2024, 2023 and 2022, the Company incurred leased employee wages and related expenses from a related party of $3,509,876, $2,713,448, and $2,463,126, respectively. During 2024, 2023 and 2022, the Company also paid marketing expenses of $273,000, $271,250, and $271,250, respectively, to related parties.
Amounts due from related parties in accounts receivable totaled $3,191 and $14,275 at December 31, 2024 and 2022, respectively. There were no receivables from related parties at December 31, 2023.
Amounts due to related parties in accounts payable totaled $337 at December 31, 2024. There were no amounts due to related parties at December 31, 2023 and 2022.
C.T.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 49)
What This Means (2025 FDD)
According to Caring Transitions' 2025 Franchise Disclosure Document, the company does contract with a related party for its leased employees. This related party is responsible for hiring all of Caring Transitions' employees and managing the payroll function, including payroll taxes, benefits, and retirement plans.
In 2024, Caring Transitions incurred $3,509,876 in leased employee wages and related expenses from this related party. This figure was $2,713,448 in 2023 and $2,463,126 in 2022. These figures show a consistent and increasing reliance on the related party for employee leasing.
For a prospective franchisee, this arrangement means that Caring Transitions itself does not directly employ staff. Instead, it relies on a third party (a related entity) to handle employment responsibilities. This could simplify some administrative tasks for the franchisee, such as payroll and benefits administration. However, it also means that the franchisee's employees are technically employed by a different entity, which could have implications for control and liability. It would be prudent for a prospective franchisee to fully understand the terms of this arrangement and the relationship between Caring Transitions and the employee leasing company.