What is the Caring Transitions franchisor's cost in maintaining CTBids.com?
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 defrays its costs in providing, operating, and maintaining CTBids.com through a "buyer's premium," which is a fee paid by winning bidders on the online auction website. The buyer's premium is calculated as a percentage of the winning bid. While the document mentions that the buyer's premium defrays Caring Transitions' costs in maintaining CTBids.com, it does not specify the exact costs incurred by the franchisor for this purpose.
Instead, the FDD details how the buyer's premium is divided between the franchisor and the franchisee. During a franchisee's first two years of operation, Caring Transitions receives 3% of the winning bid, increasing to 4% in the third year, 5% in the fourth year, and 6% from the sixth through tenth years. 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 would receive $1.50, and the franchisee would receive $7.50.
The FDD also states that Caring Transitions has the right to establish a maximum and minimum buyer's premium, with a presently intended maximum and recommended buyer's premium of 18%. The franchisor can modify this policy with 30 days' notice, but the amount they receive will not exceed 6% of the winning bid. In calendar year 2024, Caring Transitions did not derive any revenue from the buyer's premium. A prospective franchisee should inquire with the franchisor about the specific costs associated with maintaining CTBids.com to gain a clearer understanding of the financial aspects of the online auction platform.