Can the Caring Transitions Funds and earnings benefit the Franchisor?
Caring_Transitions Franchise · 2025 FDDAnswer from 2025 FDD Document
The Funds and all earnings thereof shall not otherwise inure to the benefit of Franchisor.
- (e) It is anticipated that all franchisee contributions to and earnings of the Funds will be spent for advertising and/or promotional purposes during the taxable year within which the contributions are made.
If, however, excess amounts remain in the Funds at the end of such taxable year, all expenditures in the following taxable year(s) shall be made first out of accumulated earnings from previous years, next out of earnings in the current year, and finally from contributions.
- (f) Franchisor (and any designee of Franchisor) shall not have any direct or indirect liability or obligation to Franchisee, to the Funds, or otherwise with respect to the management, maintenance, direction, or administration of the Funds.
Franchisor is not liable for any act or
omission, whether with respect to the Funds or otherwise, that is consistent with this agreement or other information provided to Franchisee, or that is done in subjective good faith. Franchisee and Franchisor, each having a mutual interest and agreeing on the critical practical business importance of their relationship being governed solely by written instruments signed by the parties to be bound (and not having either party subject to the uncertainty inherent in the application of legal or other concepts not expressly agreed to in writing by both parties), agree that all of their rights and obligations with respect to the Funds and all related matters are governed solely by this agreement and that neither this agreement nor the Funds are in the nature of a "trust," "fiduciary relationship" or similar special arrangement, but is only an ordinary commercial relationship between independent businesspersons for their independent economic benefit.
- 11.4.
Separate Asset.
The Funds are not and shall not be assets of Franchisor.
- 11.5.
Termination of Fund.
Although Franchisor intends the Funds to be of perpetual duration, Franchisor maintains the right to terminate any Fund.
No Fund may be terminated, however, until all moneys in the Fund have been expended for advertising and/or promotional purposes or returned to contributors on the basis of their respective contributions during the one-year period immediately preceding the termination.
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 Funds and all earnings thereof shall not otherwise inure to the benefit of the Franchisor. However, franchisee contributions may be used to defray reasonable salaries, overhead, and administrative, accounting, and legal costs that the Franchisor may incur related to the administration or direction of the Funds or advertising programs for Caring Transitions franchisees. This includes the costs of enforcing contributions to the Funds and preparing a statement of operations.
While the primary intention is for franchisee contributions and earnings of the Funds to be used for advertising and promotional purposes within the taxable year, any excess amounts remaining at the end of the year will be used in the following year. Expenditures will first be made from accumulated earnings from previous years, then from earnings in the current year, and finally from contributions.
Caring Transitions maintains the right to terminate any Fund, but only after all monies in the Fund have been expended for advertising and/or promotional purposes or returned to contributors based on their respective contributions during the one-year period immediately preceding the termination. The Funds are not and shall not be assets of Franchisor.