What are the Caring Transitions franchisee's obligations regarding participation in system-wide promotions (Item 9) and how does that relate to the national branding fee described in Item 6?
Caring_Transitions Franchise · 2025 FDDAnswer from 2025 FDD Document
earing our logos and service marks.
Each franchisee is required to pay a National Branding Fee of 2% of monthly Gross Receipts or $350.00 per month, whichever is greater, to the National Branding Fund. (Franchise Agreement § 5.2). We may increase the amount of the National Branding Fee, but not by more than 10% per each year in which the franchise agreement has been in effect. Any increase in the National Branding Fee will be effective at least 30 days after you receive notice of the increase. All National Branding Fees
are maintained in a separate bank account and may only be spent on advertising, promotion, and marketing of the services provided by Caring Transitions franchises, the development of new public relations campaigns and new advertising, promotional and marketing materials for the Caring Transitions system, the solicitation of National Accounts, employment of marketing personnel, and administrative costs associated with the maintenance of the National Branding Fund. Our current policy is to use the National Branding Fund for the development of new advertising, promotional and marketing materials and to advertise the services provided by franchisees in certain print media. However, we have the right to change this policy at any time and use the National Branding Fund to place advertising in national, regional or local media (including broadcast, print, or other media). We are reimbursed for any overhead, postage or labor provided to the National Branding Fund. Each franchisor-owned location, if any, will contribute to the National Branding Fund on the same basis as you.
The National Branding Fund is administered by our accounting personnel. An unaudited annual financial statement of the National Branding Fund is available to you after April 1 of each year. We do not presently have the National Branding Fund audited by an independent certified public accountant, but we reserve the right to do so at the National Branding Fund's expense.
The National Branding Fund is not and will not be an asset of ours. The National Branding Fund is not a "trust", and we will have no fiduciary duty to you or any other franchisee in connection with the management of the National Branding Fund. The National Branding Fees you pay are not refundable or transferable under any circumstances, even upon the expiration, termination, or transfer of your franchise. We are not required to spend any amount on advertising in your territory or to ensure that you benefit directly or pro rata from the National Branding Fees you pay. We are not required to spend equal or pro rata amounts on each franchise. Except as disclosed above, neither we nor any of our affiliates receive any payment from the Fund. During the one-year period ending on December 31, 2024, the National Branding Fund had total receipts of $2,008,018 and total expenses of $1,738,015, of which 44.9% was spent on promotional programs, 23.1% for Web-based programs, 2.5% on regional and national meetings, and 29.6% for shipping and administration expenses.
What This Means (2025 FDD)
According to Caring Transitions' 2025 Franchise Disclosure Document, franchisees are required to participate in system-wide promotions through the National Branding Fund. Each franchisee must pay a National Branding Fee, which is the greater of 2% of monthly Gross Receipts or $350.00 per month. This fee contributes to the National Branding Fund, which Caring Transitions uses for advertising, promotion, and marketing of the services provided by Caring Transitions franchises.
The National Branding Fund supports various marketing initiatives, including the development of new public relations campaigns, advertising materials, and promotional items for the Caring Transitions system. The funds may also be used to solicit National Accounts and cover administrative costs associated with maintaining the fund. While Caring Transitions' current policy is to use the fund for developing new marketing materials and advertising in certain print media, they reserve the right to change this policy and use the fund for advertising in national, regional, or local media.
Franchisees benefit from the National Branding Fund through increased brand awareness and marketing support, which can help drive business to their individual locations. The fund is administered by Caring Transitions' accounting personnel, and an unaudited annual financial statement of the fund is available to franchisees after April 1 of each year. Franchisees are required to contribute to the national fund via electronic funds transfer payable to "Caring Transitions National Branding Fund."
In addition to the National Branding Fee, Caring Transitions franchisees are also obligated to spend a minimum amount on local marketing. During the first 12 months of operation, franchisees must spend at least $399 a month on local marketing. After the first year, this requirement increases to at least 4% of their Gross Receipts on an annual basis. Failure to meet the minimum local marketing expenditure can result in a default of the Franchise Agreement, although franchisees have the option to cure this default by paying the difference to the National Branding Fund.