Is a Caring Transitions franchisee prohibited from soliciting referrals from Shared Referral Sources after the termination of the franchise agreement?
Caring_Transitions Franchise · 2025 FDDAnswer from 2025 FDD Document
- 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.
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 franchisee is restricted from soliciting referrals from Shared Referral Sources after the termination of the franchise agreement. Specifically, for a period of two years after the termination, expiration, or transfer of the Franchise Agreement, the franchisee cannot promote or solicit referrals for estate liquidation or household liquidation services, moving management services, Permitted Products and Services, or any other services that had been offered by the franchised business from any Shared Referral Source located in the Territory. This restriction applies regardless of the reason for termination.
The FDD defines a "Shared Referral Source" as an entity that frequently recommends providers of services similar to those offered by a Caring Transitions franchise due to its purpose or business nature. This includes entities like attorneys, bank trust departments, publications of general circulation, real estate agents and brokers, funeral homes, and senior care facilities. Caring Transitions retains the exclusive right to identify Shared Referral Sources.
This non-solicitation clause is designed to protect Caring Transitions' business interests and those of its franchisees by preventing a former franchisee from leveraging established relationships with referral sources to compete with the system after leaving. The agreement specifies that the covenants within this section will remain in effect even after the agreement's expiration, termination, or cancellation. The two-year restriction period can be extended if the franchisee violates the terms of the non-solicitation agreement.
It is important to note that these restrictions are in place to protect the Caring Transitions network. The franchisee acknowledges that these geographic and temporal restrictions are reasonable and necessary to protect Caring Transitions' business interests in the relevant markets. Prospective franchisees should carefully consider the implications of these post-termination covenants, as they significantly limit the franchisee's ability to operate a similar business or solicit business from established referral sources within the specified territory for two years after leaving the Caring Transitions system.