When must a Caring Transitions franchisee establish the EDT Account?

According to Caring Transitions' 2025 Franchise Disclosure Document, a franchisee must establish an electronic depository transfer account (EDT Account) within two months after the effective date of the franchise agreement and before opening the franchised business. The EDT Account must be set up at a national banking institution approved by Caring Transitions. Franchisees must also provide Caring Transitions with authorization for electronic funds transfer for direct debits from this account.

This requirement ensures that Caring Transitions can efficiently collect payments such as royalties, national branding fees, and technology fees. The franchisee is responsible for maintaining sufficient funds in the EDT Account to cover these obligations as they become due. Furthermore, the franchisee authorizes Caring Transitions to initiate debit and credit correction entries to the EDT Account for any amounts payable to Caring Transitions or its affiliates.

Failure to maintain sufficient funds or closing the EDT Account without Caring Transitions' consent can result in penalties. Specifically, if a debit is denied due to insufficient funds or account closure, the franchisee will incur a $50 charge-back fee, reimburse Caring Transitions for all related bank and transaction charges, and pay interest on the unpaid amount from the fifth day of the month the payment was due. Caring Transitions also reserves the right to require payments through methods other than the EDT Account.

This electronic payment system is a standard practice in franchising, designed to streamline financial transactions between the franchisee and franchisor. Prospective Caring Transitions franchisees should be aware of these requirements and ensure they can comply with the specified timelines and funding obligations to avoid potential penalties and maintain a good financial standing with the franchisor.