What is the Caring Transitions franchisee's obligation regarding the operation of the franchised business?

limits required by Franchisor.

7.10 Limited Liability Business Entity.

• (a) If Franchisee is a limited liability business entity (such as a corporation or limited liability company) when it signs this agreement, it must satisfy the following requirements at the time it signs this agreement:

  • (1) Franchisee must be a newly organized business entity that has never operated or engaged in any business.
  • (2) Franchisee's organizational and governing documents must (i) provide that its activities are confined exclusively to operating one or more Caring Transitions Franchises, (ii) prescribe a maximum of ten Principals, and (iii) prohibit the issuance or transfer of its ownership interests other than in compliance with the terms and conditions of this agreement.
  • (3) Franchisee shall provide Franchisor with a list of principal owners, certified by the Designated Individual, containing the full legal name, home address, home telephone number, and ownership percentage of each principal of Franchisee.
  • (4) Each principal of Franchisee must execute a separate agreement, in a form prescribed by Franchisor, unconditionally guaranteeing the full payment of Franchisee's obligations under this agreement and agreeing to be jointly and severally bound by all the provisions of this agreement, including the Covenants After Termination.
  • (5) Each ownership certificate of Franchisee must bear a legend stating that the issuance and transfer of any ownership interest in Franchisee are subject to the terms and conditions of this agreement. If Franchisee is a limited liability company without certificates evidencing ownership, Franchisee shall provide Franchisor with acceptable evidence that its partnership or operating agreement or other organizational documents contain provisions acceptable to Franchisor prohibiting the transfer of any ownership interest in Franchisee other than in compliance with the terms and conditions of this agreement.
  • (6) Franchisee shall provide Franchisor with true and complete copies of its organizational and governing documents, including the resolutions of its Principals or governing body authorizing the execution of this agreement.
  • (7) The name of the Limited Liability Entity may not contain any of the words CARING TRANSITIONS, CARING, TRANSITIONS, or CT in any order, any variation thereof, or any of the other Marks.

• (b) If Franchisee is not a limited liability business entity when it signs this agreement, then within 90 days after signing this agreement, Franchisee shall transfer all of its interest in the Franchised Business and all of its rights and obligations under this agreement to a limited liability business entity, comply with all of the requirements in subparagraph 7.10(a), and comply with the following additional requirements:

  • (1) The individual(s) who executed this agreement as Franchisee shall beneficially own a controlling interest in the limited liability business entity and shall not diminish his/her/their ownership Interest therein, except as may be required by law.
  • (2) One of the individuals who executed this agreement as Franchisee shall act as the principal executive (or manager) and operating officer of the limited liability business entity.
  • (3) Franchisee shall reimburse Franchisor for actual legal costs incurred by Franchisor in approving and effecting the transfer to the limited liability business entity.

• (c) At all times while this agreement is in effect:

  • (1) The limited liability business entity shall not operate any other business or engage in any other business activities except the operation of one or more Caring Transitions Franchises.
  • (2) Franchisee shall not cause or permit any of provision of its organizational or governing documents to be modified or restated without Franchisor's prior written approval.
  • (3) Within ten days after Franchisor's request or after any change in any information on the Principal List, Franchisee shall provide Franchisor with an updated list of principals.
  • (4) Upon request, Franchisee shall provide Franchisor with true and complete copies, certified by the Designated Individual, of Franchisee's organizational and governing documents.
  • (5) Each new Principal of Franchisee must execute an agreement, in a form prescribed by Franchisor, unconditionally guaranteeing the full payment of Franchisee's obligations under this agreement and agreeing to be jointly and severally bound by all the provisions of this agreement, including the Covenants After Termination.
  • (6) Franchisee acknowledges that any limited liability business entity through which Franchisee derives Gross Receipts or provides Permitted Products and Services is closely related to and bound by this Agreement, including its jurisdiction and arbitration clauses.

• 7.11 Compliance with Law.

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 41–49)