After the Caring Transitions franchise agreement terminates, what are 'Shared Referral Sources' and how does the non-compete affect them?
Caring_Transitions Franchise · 2025 FDDAnswer from 2025 FDD Document
ated in a franchise territory licensed to another franchisee of the System. A "Shared Referral Source" is a person or organization that: (i) because of its purpose or the nature of its business, frequently encounters opportunities to recommend, to its customers, members, or to the general public, providers of services
similar to the services offered by a Caring Transitions franchise; and (ii) though it may be physically located within one franchise territory, serves a geographic area larger than that franchise territory. Examples of Shared Referral Sources (by way of illustration and not limitation) are attorneys, bank trust departments, publications of a general circulation, real estate agents and brokers, funeral homes, senior care facilities, and similar organizations. Franchisor retains the sole and exclusive right to identify Shared Referral Sources on a case-by-case basis, in Franchisor's sole and absolute discretion. All disputes between franchisees of the System relating to Shared Referral Sources will be resolved by Franchisor, whose decision will be final and binding upon all parties. Nothing in this paragraph authorizes or permits Franchisee to offer, sell or provide Permitted Products and Services outside the Territory described in Exhibit B, or to sell or provide products or services to a Shared Referral Source located in a franchise territory licensed to another franchisee of the System.
- 1.6 Clients. Franchisee acknowledges and agrees that it acquires no rights in or to its clients or client list other than those specifically granted under this Agreement. Upon the expiration or termination of this Agreement for any reason, Franchisor may notify Franchisee's clients thereof and, without compensation to Franchisee, authorize one or more other Caring Transitions franchisees or any other third party to provide Permitted Products and Services to Franchisee's former clients. All client data is solely owned by Franchisor. Franchisor may access client data from the Communication and Information System at any time. If a franchisee provides Permitted Products and Services in a franchise territory before Franchisor grants such territory to a new franchisee, then Franchisor may, in its discretion, allow the pre-existing franchisee to continue to provide Permitted Products and Services to pre-existing clients, but the pre-existing franchisee may not thereafter solicit or accept new clients in any part of the new franchisee's franchise territory.
- 1.7 Permitted Activities. The rights granted to Franchisee under this Agreement are limited to the sale of Permitted Products and Services to clients within the Territory. Franchisee shall not promote, offer, sell, provide, or distribute any other goods or services without Franchisor's prior written approval.
- 1.8 Reserved Rights of Franchisor. Franchisor specifically reserves all rights not expressly granted to Franchisee in this agreement.
- 1.9 Acquisition of Competing System.
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 41–49)
What This Means (2025 FDD)
According to Caring Transitions' 2025 Franchise Disclosure Document, a "Shared Referral Source" is defined as an entity that frequently recommends services similar to those offered by a Caring Transitions franchise, such as attorneys, bank trust departments, publications of general circulation, real estate agents and brokers, funeral homes, and senior care facilities. These sources often serve a geographic area larger than a single franchise territory.
After the franchise agreement terminates, a franchisee is subject to a non-compete covenant for two years. This covenant restricts the franchisee from engaging in activities that compete with Caring Transitions within a 15-mile radius of their former territory or any other Caring Transitions franchise territory. Specifically, the franchisee cannot promote, sell, procure, provide, or solicit referrals for moving management, estate liquidation, or household liquidation services from any Shared Referral Sources within that 15-mile radius.
This non-compete clause is designed to protect Caring Transitions' business interests and those of its franchisees by preventing former franchisees from leveraging established relationships with Shared Referral Sources to compete against the system shortly after leaving. This restriction ensures that the goodwill and referral networks built during the franchise term remain with the Caring Transitions system.