Does the Caring Transitions Franchisor unreasonably withhold consent to a transfer of any interest in Franchisee?
Caring_Transitions Franchise · 2025 FDDAnswer from 2025 FDD Document
he System or the Marks in less than the entire Territory will be valid.
- (b) Except as provided in Article 12, Franchisor shall not unreasonably withhold its consent to a transfer of any interest in Franchisee, in this agreement, or in the franchise granted hereunder; provided, however, that prior to the transfer, Franchisor may, in its sole discretion, require that:
- (1) All of Franchisee's accrued monetary obligations to Franchisor or any of its affiliates and all other outstanding obligations related to the franchised business shall have been satisfied.
- (2) The transferor's right to receive compensation pursuant to any agreement for the purchase of any interest in Franchisee or in Franchisee's Caring Transitions franchise is subordinated and secondary to Franchisor's rights to receive any outstanding monetary obligations or other outstanding obligations due from transferor or Franchisee pursuant to this agreement, whether arising before or after the transfer.
- (3) Franchisee and all individuals that have an ownership interest in Franchisee shall have executed a general release in a form satisfactory to Franchisor, effective as of the date of transfer, of any and all claims against Franchisor and its officers, directors, shareholders, and employees, in their corporate and individual capacities, including, without limitation, claims arising under federal, state and local laws, rules and ordinances.
- (4) The transferee franchisee shall enter into a written assumption, in a form satisfactory to Franchisor, assuming and agreeing to discharge all of Franchisee's obligations under this agreement prior to and after the date of the assumption.
- (5) The transferee franchisee authorizes Franchisor to conduct such background investigations as Franchisor deems necessary (which may include credit report/score, criminal record, and behavioral assessment), and demonstrates to Franchisor's satisfaction that it meets Franchisor's educational, managerial and business standards; possesses a good moral character, business reputation, and credit rating; has the aptitude and ability to conduct the franchised business (as may be evidenced by prior related business experience
or otherwise), and has adequate financial resources and capital to operate the business.
- (6) The transferee franchisee shall execute Franchisor's then current form of Franchise Agreement and such other ancillary agreements as Franchisor may require.
- (7) At the transferee franchisee's expense, and upon such other terms and conditions as Franchisor may reasonably require, the transferee franchisee or its manager shall complete the initial training program then in effect for franchisees, and Franchisee shall continue to provide operational and consulting support to transferee franchisee for a reasonable period of time after completion of the initial training program.
- (8) Any right of Franchisee to any payments from the transferee franchisee resulting from the transfer shall be subordinate to any claim or right of Franchisor against the transferee franchisee subsequent to the effective date of the transfer, and Franchisee and the transferee franchisee shall execute any and all instruments reasonably required by Franchisor to evidence such subordination.
- (9) Either Franchisee or the transferee franchisee shall pay to Franchisor a transfer fee of the greater of Fifteen Thousand Dollars ($15,000) or ten percent (10%) of all consideration of any kind payable to Franchisee in connection with the transfer, plus Franchisor's actual legal expenses, to cover Franchisor's administrative, legal, and other expenses in connection with the transfer. No transfer fee will be required in the case of a transfer (i) of any interest in the franchised business to Franchisee's spouse or direct lineal descendant of Franchisee or one of its Principals; (ii) of less than 50% of the ownership interest of a non-individual Franchisee;
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 41–49)
What This Means (2025 FDD)
According to Caring Transitions' 2025 Franchise Disclosure Document, the franchisor generally will not unreasonably withhold consent to a transfer of interest in the franchise, the agreement, or the franchisee, with some exceptions. However, Caring Transitions may require certain conditions to be met before a transfer is approved.
These conditions include ensuring all monetary and outstanding obligations to Caring Transitions and its affiliates are satisfied. Additionally, the transferor's right to receive compensation from the transfer must be secondary to Caring Transitions' rights to receive any outstanding payments. The franchisee and all individuals with ownership interest must execute a general release of claims against Caring Transitions. The transferee must also enter into a written agreement assuming all of the franchisee's obligations.
The transferee franchisee must authorize Caring Transitions to conduct background investigations and meet the franchisor's standards for education, management, business, moral character, reputation, credit rating, aptitude, ability, and financial resources. The transferee must also execute the current form of the Caring Transitions Franchise Agreement and complete the initial training program.
However, Caring Transitions is not obligated to consent to a transfer to any person or entity that owns, operates, franchises, licenses, develops, consults with, manages, is involved in, employed by, or controls a competitive business. If Caring Transitions refuses a transfer based on competitive concerns, the franchisee's sole recourse is to seek a declaratory judgment in court to determine if the proposed transferee is indeed involved in a competitive business.