What documents must a Caring Transitions franchisee provide to the franchisor regarding its organization?
Caring_Transitions Franchise · 2025 FDDAnswer from 2025 FDD Document
limits required by Franchisor.
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.
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 41–49)
What This Means (2025 FDD)
According to Caring Transitions' 2025 Franchise Disclosure Document, franchisees must provide several documents related to their organization to the franchisor. If the franchisee is a limited liability business entity when signing the agreement, they must provide true and complete copies of their organizational and governing documents, including resolutions authorizing the agreement's execution. They must also provide a list of principal owners, certified by the Designated Individual, including their full legal name, home address, home telephone number, and ownership percentage.
If the franchisee is not a limited liability business entity when signing the agreement, they have 90 days to transfer their interest in the franchised business to such an entity. After the transfer, the franchisee must provide the same organizational and governing documents as if they were a limited liability entity from the outset. Additionally, at any time during the agreement, Caring Transitions can request updated lists of principals, which the franchisee must provide within ten days of the request or after any change in the information.
Furthermore, Caring Transitions can request true and complete copies of the franchisee's organizational and governing documents, certified by the Designated Individual, at any time during the agreement. These requirements ensure that Caring Transitions maintains oversight of the franchisee's business structure and ownership, allowing them to enforce the franchise agreement and protect their brand. Franchisees must also ensure that their organizational documents do not conflict with the franchise agreement and that any changes are approved by Caring Transitions.