What is the Caring Transitions franchisee's obligation if a debit is denied due to insufficient funds?
Caring_Transitions Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee may not close the EDT Account without Franchisor's consent.
Franchisor reserves the right to require Franchisee to remit payments in any manner other than through the EDT Account.
- (b) If Franchisee has not timely reported Franchisee's Gross Receipts to Franchisor for any reporting period, then Franchisor shall debit Franchisee's EDT Account by an amount equal to the prescribed fee in Section 5.3, plus 125% of the Royalty and National Branding Fee that Franchisor was entitled to debit in the prior reporting period.
If the amounts debited are less than the amounts Franchisee actually owes (once Franchisor determines Franchisee's true Gross Receipts for the reporting period), Franchisor shall debit the EDT Account for the balance of the Royalty and National Branding Fee due on the date specified by Franchisor.
If the amounts debited are greater than the amounts Franchisee actually owes (once Franchisor determines Franchisee's true Gross Receipts for the reporting period), Franchisor shall credit the excess against the amount Franchisor otherwise would debit from the EDT Account during the following month, without interest.
Nothing in this paragraph is to be construed to waive, postpone, or suspend Franchisee's obligations to submit any reports, records, or other materials
required by this agreement. Franchisee acknowledges that its failure to accurately report Gross Receipts when due constitutes a breach of this agreement, notwithstanding the provisions of this paragraph.
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 41–49)
What This Means (2025 FDD)
Based on the 2025 Caring Transitions Franchise Disclosure Document, if a franchisee has not reported their gross receipts on time, Caring Transitions has the right to debit the franchisee's EDT (Electronic Debit Transfer) account. The amount debited will be the fee prescribed in Section 5.3, plus 125% of the Royalty and National Branding Fee that Caring Transitions was entitled to debit in the prior reporting period.
If the debited amounts are less than what the franchisee actually owes, Caring Transitions will debit the EDT Account for the remaining balance of the Royalty and National Branding Fee. Conversely, if the debited amounts are greater than what is owed, Caring Transitions will credit the excess against the amount they would otherwise debit from the EDT Account the following month, without interest.
It is important to note that these debit adjustments do not waive, postpone, or suspend the franchisee's obligation to submit required reports, records, or other materials. Failure to accurately report gross receipts when due constitutes a breach of the franchise agreement, regardless of these debit provisions. The franchisee may not close the EDT Account without Caring Transitions' consent, and Caring Transitions reserves the right to require payments through other methods.