After the Caring Transitions franchise agreement expires or terminates, what specific referral sources is the franchisee prohibited from soliciting?
Caring_Transitions Franchise · 2025 FDDAnswer from 2025 FDD Document
s Agreement.
- 15.4 Nonsolicitation of Customers and Shared Referral Sources. Franchisee shall not, directly or indirectly, for itself or through, on behalf of, or in conjunction with any person or entity for a continuous and uninterrupted period commencing upon the expiration or termination of this agreement (regardless of the cause for termination) and continuing for two years thereafter, directly or indirectly: (i) solicit or sell products or services to any person who was a customer of the franchised business at any time during the term of this agreement; or (ii) promote or solicit referrals for estate liquidation or household liquidation services or moving management services, any Permitted Products and Services, or any other services that had been offered by the franchised business, from any Shared Referral Source (as defined in Section 1.5 above) located in the Territory. The two-year time period referred to in this paragraph will be stayed during any violation or breach of the terms of this paragraph. The covenants in this paragraph will survive the expiration, termination or cancellation of this agreement.
- 15.5 Exclusion for Publicly Traded Company. Section 15.3 shall not apply to the beneficial ownership by Franchisee of less than one percent (1%) of the outstanding equity securities of any corporation that is registered under the Securities and Exchange Act of 1934.
- 15.6 Independent Covenants; Severability. The parties agree that each of the foregoing covenants shall be construed as independent of any other covenant or provision 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, for two years after the franchise agreement expires or terminates, a franchisee is prohibited from soliciting referrals from Shared Referral Sources. A "Shared Referral Source" is defined as a person or organization that frequently recommends service providers similar to Caring Transitions due to their business or purpose and serves a geographic area larger than a single franchise territory.
The FDD provides examples of Shared Referral Sources, including attorneys, bank trust departments, publications of general circulation, real estate agents and brokers, funeral homes, and senior care facilities. However, Caring Transitions retains the sole right to identify Shared Referral Sources on a case-by-case basis. Any disputes between franchisees regarding Shared Referral Sources will be resolved by Caring Transitions, whose decision will be final.
This restriction is in place to protect Caring Transitions' business interests and the relationships it has cultivated with these referral sources. The franchisee acknowledges that these restrictions are reasonable and necessary. This clause prevents a former franchisee from leveraging the goodwill and connections established during their time with Caring Transitions to unfairly compete with the franchisor or other franchisees after leaving the system.
Prospective franchisees should be aware of this post-term restriction and how it might impact their ability to operate a similar business after the franchise agreement ends. It is important to understand the definition of "Shared Referral Sources" and how Caring Transitions identifies them to ensure compliance with the non-solicitation clause.