What is the Caring Transitions franchisor's cost in defraying the auction?
Caring_Transitions Franchise · 2025 FDDAnswer from 2025 FDD Document
chise Agreement § 6.1).
A "buyer's premium" is a fee paid by winning bidders for items won on our online auction website, www.CTBids.com. The buyer's premium defrays our costs in providing, operating, and maintaining CTBids.com and the franchisee's costs in conducting the auction, but there are no specific restrictions on its use. It is calculated as a percentage of the winning bid. For example, if an auction is won for $50 and the buyer's premium is 18%, the winning bidder will pay a buyer's premium of $9 (that is, 18% of $50). From the buyer's premium, (a) we will receive an amount equal to 3% of the winning bid ($1.50 in the above example) during a franchisee's first two years of operation and the franchisee will receive the balance of the buyer's premium ($7.50 in the above example); (b) we will receive 4% of the winning bid during the third year of operation and the franchisee will receive the balance; (c) we will receive 5% of the winning bid during the fourth year of operation and the franchisee will receive the balance; and (d) we will receive 6% of the winning bid during the sixth through tenth years of operation and the franchisee will receive the balance. Note: this is an example only and is not to be construed as a projection or estimate of actual or potential earnings, sales or receipts. We have the right, in our sole discretion, to establish a maximum and minimum buyer's premium. Presently we intend to set a maximum and recommended buyer's premium of 18%. We reserve the right to modify this policy after providing 30 days' notice but the amount of the buyer's premium that we receive will not exceed 6% of the winning bid. We did not derive any revenue from the buyer's premium in calendar year 2024. We do not otherwise presently set minimum or maximum prices at which you must sell products or services or otherwise assist in establishing prices although we reserve the right to do so. We may provide assistance with providing equipment, signs, fixtures, and supplies by providing the names of approved suppliers. We do not presently provide written specifications for such items and do not deliv
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 22–29)
What This Means (2025 FDD)
According to Caring Transitions' 2025 Franchise Disclosure Document, the franchisor uses a "buyer's premium" to defray its costs related to providing, operating, and maintaining the CTBids.com online auction website. This buyer's premium is a fee paid by the winning bidders. The franchisor receives a percentage of the winning bid from this premium. During a franchisee's first two years of operation, Caring Transitions receives 3% of the winning bid. This increases to 4% during the third year, 5% during the fourth year, and 6% during the sixth through tenth years of operation. The franchisee receives the balance of the buyer's premium.
For example, if an auction is won for $50 and the buyer's premium is 18%, the winning bidder pays a buyer's premium of $9. During the franchisee's first two years, Caring Transitions receives $1.50 (3% of $50), and the franchisee receives $7.50. The document specifies that this example is not a projection or estimate of actual or potential earnings, sales, or receipts.
Caring Transitions retains the right to establish a maximum and minimum buyer's premium, and currently intends to set a maximum and recommended buyer's premium of 18%. While Caring Transitions reserves the right to modify this policy after providing 30 days' notice, the amount they receive will not exceed 6% of the winning bid. The FDD states that Caring Transitions did not derive any revenue from the buyer's premium in calendar year 2024.